Staying True to
Our Goals
Annual Report 2011
Fiscal Year Ended March 2011www.nisshinbo.co.jp/english/

Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, JAPANTEL +81-3-5695-8833 FAX +81-3-5695-8970
Printed in Japan

Net Sales of Nisshinbo Holdings Inc.

Contents

PLAN*

Fiscal Year Ending March 31,

2012¥ 403.0

billionACTUAL
Fiscal Year Ended March 31,

2011

Textiles

57.4¥ 325.6

billionAutomobile
Brakes

Implementing boldreforms to achieve
our long-term
management targets

2 Financial Highlights

4 To Our Shareholders
In the fiscal year ended March 2011, the textiles business, which had been an area of concern,
returned to the black, and we achieved the first-year targets of Challenge 2012. We intend tocontinue implementing reforms to meet the expectations of all our stakeholders.

13 Overview of Business Segments
Textiles Nisshinbo Textile Inc.

14

Automobile Brakes Nisshinbo Brake Inc.

16

46.1

Papers Nisshinbo Paper Products Inc.
Precision Instruments Nisshinbo Mechatronics Inc.

Papers31.1

Precision
Instruments

32.0

Chemicals

7.3

18
20

Chemicals Nisshinbo Chemical Inc.

22

Electronics Japan Radio Co., Ltd.

24

Real Estate Nisshinbo Holdings Inc.

26

Under the Challenge 2012 Three-Year Management Plan, launchedin April 2010, we are pushing ahead with bold management reforms

27 CSR Activities

that will take Nisshinbo in a new direction. We are targeting net salesof more than ¥600 billion and ROE of over 9% by the fiscal year ending March 2018. To achieve these goals, we are promoting production
and sales in optimal locations worldwide and channeling management

Electronics

112.8

We will continue to contribute to society with integrity by engaging in business activities based on the Nisshinbo Group’s corporate principles—public entity, consistent integrity, and innovation.

resources into environmental and energy businesses.

34 Board of Directors

In the fourth quarter of the fiscal year ended March 2011, Japan
Radio and Nagano Japan Radio joined the Nisshinbo Group as con-

35 Financial Section

solidated subsidiaries. These companies will contribute a full year of
earnings from the fiscal year ending March 2012. Synergies in

58 History

non-operational areas are likely to emerge first, but we plan to rapidly
realize operational synergies to support a surge in growth.
*Nisshinbo has revised its earnings forecasts following the announcement of a major
business restructuring plan by consolidated subsidiary New Japan Radio Co., Ltd.
(as of August 30, 2011).

Real Estate

12.4

Other
Businesses

26.4

59 Corporate Data

1

Financial Highlights

350

350

300

300

250

250

(billions of yen)(billions of yen)

For the years ended March 31

2007

2008

2009

2010

200
350

200
350
150
Net
300 Sales and Operating Income(millions of yen)(thousands of
US dollars)

150
300

2011

2011

100
250
350

100
250
350

50
200
300

50
200
300

Operating Results(billions of yen)(billions of yen)

20

20

8

8

15

15

6

6

(billions of yen)(billions of yen)

(%)

(%)

20
10

8
4

8
4

(billions of yen)(billions of yen)

15
20
5

15
20
5

(%)

(%)

10
15
0

10
15
0

4
6
0

4
6
0

5

5
10

2
4

2
4

0

0
5

0
2

0
2

0

0

0

0.8

0.8

Net Sales¥312,825¥322,412¥286,167¥242,409¥325,555$3,830,059

0
150
250

0
150
250

Textiles

79,96076,09464,39253,222

57,400675,294

100
200

100
200
TextilesAutomobile Brakes

54,81959,812

49,23041,046

46,119542,577

50
150

OperatingOperating Income
50 Income
150

Papers29,90833,54734,214

31,536

31,122

366,141

0
100

0
100

Precision Instruments

30,88534,02135,602

24,90832,020376,706

50

50
TextilesChemicals

9,588

9,582

8,059

6,309

7,284

85,6940

0 Income
OperatingOperating Income

Electronics

76,06876,47560,54951,699112,820

1,327,294(%)(%)
Textiles8

8 Chemicals
ChemicalsElectronics Electronics
Real Estate Real Estate
Other Businesses
Other Businesses

07

07
08

08
09

TextilesAutomobileAutomobile
BrakesBrakesPapers

09
10

10
11

11

Precision Instruments
Precision Instruments
PapersChemicals Chemicals
Electronics Electronics
Real Estate Real Estate
Other Businesses
Other Businesses10

07

07
08

08
09

TextilesAutomobileAutomobile
BrakesBrakesPapers

09
10

10
11

11 5

20
10

Operating Margin
6
8
2

6
8
2

07

07
08

08
09

09
10

10
11

11

07

07
08

08
09

09
10

10
11

11

07

07
08

08
09

09
10

10
11

11

Precision Instruments
Precision Instruments
PapersChemicals Chemicals
Electronics Electronics
Real Estate Real Estate
Other Businesses
Other Businesses

Real Estate

4,374

5,010

6,011

6,298

12,437

146,318

Other Businesses

27,22327,871

28,11027,391

26,353

310,035

6

Operating Income

11,551

12,034408

3,570

19,843

233,447(%)

Net Income (Loss)

15,107

12,290(1,286)

1,896

11,185131,5884
8

Total Assets¥472,670¥424,706¥366,858¥358,110¥479,852$5,645,318

Equity282,015

245,909

193,698

193,639

211,557

2,488,906

6
-2
2

6
-2
2

4

4

0

0

2

2

Net Cash Provided by Operating Activities¥19,352¥24,779¥11,939¥27,538¥16,529$194,458

Net Cash Provided by (Used in) Investing Activities(10,109)(19,147)(14,393)(9,949)11,591

136,365-2-2

Net Cash Provided by (Used in) Financing Activities(13,231)(8,829)11,940(30,347)

703

8,271

0

0

(yen)

(dollars)-2¥(7.08)¥10.38¥63.32$0.74

Shareholders’ Equity

1,301.14

1,179.43

985.191,034.04

1,036.80

12.20

15.00

15.00

15.00

15.00

15.00

0.18

Cash Dividends(%)

Key Ratios
Return on Assets (ROA)

3.1

2.7

(0.3)

0.5

2.7

Return on Equity (ROE)

5.7

5.1

(0.6)

1.0

6.1

Note: The United States dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥85 = US$1.

110

Precision Instruments
Precision Instruments
Papers

0.6
0.6
Total
Asset
Turnover Ratio

4
8

8
0
4

¥63.34

10
11

(%)

8
0
4

¥74.19TextilesAutomobileAutomobile
BrakesBrakesPapers

09
10

6

2
6
(%)

Net Income (Loss)

08
09

Return on Equity

2
6
(%)

Per Share

07
08

Operating Income
Operating Income

Financial Position

Cash Flows

2

07

07

07

07
08

07
08

08
09

08
09

-2

Net Income
per Share
07
07
08
08
09

09
10

10
11

11

09
10

10
11

11

09
10

10
11

11

0.8
0.4

0.8
0.4

0.6
0.8
0.2

0.6
0.8
0.2

0.4
0.6
0

0.4
0.6
0

0.2
0.4

0.2
0.4

0
0.2

0
0.2

0

0

07

07
08

08
09

09
10

10
11

11

07

07
08

08
09

09
10

10
11

11

Total Cash 07
Returned
Shareholders
07
08 to08
09
09
10
10
11

11

(yen)

(yen)

(billions of yen)(billions of yen)

80

80

20

20

60

60

15

15

(yen)

(yen)

40
80

40
80

20
60
(yen)

20
60
(yen)

80
0
40

80
0
40

60
-20
20

60
-20
20

40

40

0

0

20

20

-20

-20

(billions of yen)(billions of yen)

20
10

20
10

(billions of yen)(billions of yen)

07

07
08

08
09

09
10

10
11

11

15
20
5

15
20
5

10
15
0

10
15
0

5
10

07

07
08

Share buybacks
Share buybacks
Dividend

5
10

08
09

09
10

10
11

11

Dividend

3

0
5

0
5

To Our Shareholders

On behalf of the Nisshinbo Group, I would like to express ourcondolences to the families who lost relatives in the Great East Japan
Earthquake on March 11, 2011. We wish a speedy recovery to all
those affected by the disaster. We are doing what we can to help withthe recovery effort through the donation of funds and the Group’s
household paper products and the provision of other support.
I believe the disaster will mark a major turning point for many people
in Japan and for Japanese companies. Since the war, most of our citizens
have been unaware that the lifestyles and convenience they have taken
for granted have existed side-by-side with a high level of risk. I believe
the experience of this tragic disaster will make Japanese people andcompanies even tougher. The Nisshinbo Group is no exception. We willcontinue to move forward each day with real purpose.

SHIZUKA UZAWA
President
Nisshinbo Holdings Inc.

4

5

Staying True to Our Goals
The fiscal year ended March 2011 marked the first year of our Challenge 2012 Three-Year Management
Plan. This plan is underpinned by our determination to realize a radical structural shift for the Nisshinbo
Group, and it incorporates a range of measures to realize this goal. We achieved the plan’s first-year
numerical targets, but I am even more pleased to see that the measures in Challenge 2012 are being
implemented effectively. In the past year, we put the first foundations in place to support the Group’s
future development. Encouraged by this progress, we will remain committed to developing and firmly
implementing strategies that increase Nisshinbo’s corporate value.

Setting the Stage for Future Growth in
the Textiles Business Through Restructuring
The textiles businessreturned to profit,
but our next goal is toboost sales overseas.
Restructuring the textiles business was
our main goal in the year under review.

A Year That Exceeded Our Expectations

more than a century of history. How-

We achieved strong
results, even excluding
the consolidation ofJapan Radio.

Here, we moved more aggressively on

Unfortunately, the Great East

ever, over the last decade, the businessbusiness restructuring, shifting pro-Japan Earthquake in March this year

has seen a prevailing trend of strong

duction overseas. This supported analso had a considerable impact on

results overseas but weakness in Japan.

improvement in profitability and thethe Nisshinbo Group. Buildings andThis strength overseas has reflected

textiles business reported its first profit

facilities at some business sites wererising profits on the back of increased

We achieved strong growth in bothin four years. Our mainstay business isdamaged, and after the earthquake

production capacity, mainly in Brazil

capability. As a result, we closed oureasy-care 100% cotton shirts, whichsales and profits, with sales rising

currently automobile brakes. Profits inwe were forced to suspend operations

and Indonesia, and in my view, it also

main factory in the textiles business—

are made using our next-generation

34.3% year on year to ¥325,555

this business also expanded owing toand adjust operating schedules dueshows that the technological strengths

the spinning and weaving plant at

non-iron processing technology

million and operating income increas-a large increase in automobile produc-to production adjustments at custom-and high added-value of our products

our Shimada business site in Shizuoka

APOLLOCOT, will also prove popular

ing to ¥19,843 million, from ¥3,570

tion, which was driven by recovery in

ers and rolling power blackouts. As a

has been recognized worldwide. In

Prefecture—and sharply downsizedamong the growing middle classes of

million in the previous fiscal year. Net

the global economy and tax incentives

result, in the fiscal year under review,

Brazil, against the backdrop of robust

our dyeing and processing plant in

China and other emerging markets.

income totaled ¥11,185 million, com-and subsidies for eco-cars in Japan. The

we incurred disaster-related losses

demand, we are continuing to expand

Aichi Prefecture. We also took the

In the second half of the fiscal

pared with ¥1,896 million last year.

precision instruments business returnedof ¥551 million, while net sales andour spinning facilities to drive profit

difficult decision of implementing ayear ended March 2011, Nisshinbo

Net sales and operating income wereto the black, with profits rising sharply

operating income were negatively

growth in the business. However, ourvoluntary retirement program, with

Textile Inc. returned to profit thanksboth record highs.

year on year on the back of recovering

impacted by around ¥1.6 billion anddomestic textile operations have been

150 employees taking up the offerto the success of these restructuring

This sharp improvement in our

demand for photovoltaic power gener-¥0.4 billion, respectively. Fortunately,

under constant pressure from imports,

and leaving the Group as of the end

measures. In the current fiscal year,

results partly reflected the consolida-

ation systems. The electronics businessthe damage to our facilities was not

and faced with an unrelenting shift toof September 2010.

we expect this overseas investment

tion of Japan Radio Co., Ltd. andalso achieved a sharp improvement ingreat enough to halt operations for

low-priced products, we positioned

Nagano Japan Radio Co., Ltd. fromprofitability, even excluding the con-an extended period, and all our busi-

the fourth quarter. We acquired Japansolidation of Japan Radio, thanks to aness sites are now running as normal.

Radio through a tender offer in De-

return to profit at New Japan Radio af-

Nevertheless, the outlook for thecember 2010. However, the past year

ter two years of losses. The real estate

Japanese economy in the fiscal year

was still an excellent year for Nisshin-business is a key source of cash for thebo even after excluding special factors
such as the Japan Radio acquisition.
One of the biggest issues weface is rebuilding the textiles business.

6

Textiles is our founding business with

Meanwhile, in Indonesia, Brazil,

to begin contributing to the Group’s

the restructuring of the textiles business

China, and India, we made major in-earnings, as our strategy of carrying

as our priority management issue.

vestments to boost spinning, weaving,out production and sales in optimal

dyeing, and shirt manufacturing ca-

locations starts to materialize. Our

sizing our domestic production capac-

pacity. These investments in overseas

ultimate goal is to drive a revival in ourending March 2012 is particularly

ity. As the final step in this process,capacity totaled nearly ¥4.0 billion.

textiles business by promoting global

Group through the development anduncertain due to power shortages andwe decided to withdraw completely

Our decision to boost overseas output

sales of textile products that are

sale of idle land. This year the businessother issues, so we will be monitor-

from volume textile production in

is aimed at supporting stepped-up ef-

recognized for their quality because

generated significant profits due to

ing trends in the industry in order toJapan during the year under review,forts to tap into the growing markets

they are made by Nisshinbo, regard-

major sales of real estate.

minimize any impact.

leaving only a product developmentof Asia. We are confident that ourless of where they are produced.

We have gradually been down-

7Generating Synergies with the Japan Radio GroupWe have set up threeworking groups to
rapidly realize synergies.

nies have joined existing consolidated

synergies, we have already identi-

subsidiaries in the electronics business,

fied potential cost savings of several

New Japan Radio Co., Ltd. and Ueda

hundred million yen that can be real-

Japan Radio Co., Ltd., making elec-

ized relatively quickly by incorporating

In December 2010, we made Japan

tronics the Nisshinbo Group’s biggest

Japan Radio into the Group’s cash

Radio Co., Ltd. a consolidated subsidi-

business segment and accounting for

management system, thereby reduc-ary through a friendly takeover. The

roughly half of consolidated sales.

ing its interest payment burden.

Overseas Developments in the Year Under Review
TextilesIndonesia PT. NIKAWA TEXTILE INDUSTRY

We increased our stake from 63.3% to 70% after buying shares from another investor in the company for around ¥200
million (December 2010). The company has built a new weaving mill (81 air-jet looms, total investment of around ¥800
million), which started operations in April 2011. The new mill has boosted weaving capacity by 40% to 39 million yards
per year.

PT. NISSHINBO INDONESIA
We increased our stake from 60% to 89% after buying shares from another investor in the company for around ¥300
million (May 2010) and through an additional capital injection of approximately ¥800 million (October 2010). In the springof 2010, we introduced new equipment to manufacture easy-care shirt fabric, boosting the company’s total monthly
output from 1.5 million yards to 1.9 million yards.

company, a leading manufacturer of

We have positioned Japan Radio

Concrete business synergies

wireless communication equipment,

as the core company in the electron-

have already been realized in ourwas previously an equity-method

ics business, giving it the initiative toelectric double-layer capacitors,

affiliate. In addition, we sold all our

restructure the entire segment basedwhich have been built on Nisshinbo’s

shares in another equity-method af-

on its grand design. At the same time,

chemical technology, ionic liquid in

We increased capital in the company by around ¥100 million (100% investment by Nisshinbo; December 2010) andconstructed a new shirt manufacturing facility (total investment of around ¥400 million). The new facility will have a line
for standard easy-care shirts, as well as a dedicated APOLLOCOT line making our next-generation non-iron shirts. We aretargeting annual production capacity of 1.6 million shirts, of which 840,000 will be APOLLOCOT shirts. This will double
the Group’s total APOLLOCOT output to 1.68 million shirts. Sales of these shirts are strong in Japan and we plan to bring
the new plant on stream as quickly as possible.

filiate ALOKA Co., Ltd., a maker of

we are working to rapidly realize

this case, and the electronic control

PT. MALAKASARI NISSHINBO DENIM INDUSTRY

ultrasound diagnostic equipment, tosynergies between Japan Radio andtechnologies of Japan Radio. Electric

Hitachi Medical Corporation. As aother businesses in the Group. Imme-

double-layer capacitors are compact,

result of the Japan Radio acquisition,diately after the successful completion

lightweight, and offer high output.

Nagano Japan Radio Co., Ltd., previ-of the tender offer, we set up a steer-

Repeated charging and discharging

ously an equity-method affiliate, also

ing committee made up of executives

causes minimal degradation of thebecame a consolidated subsidiaryfrom each company. This commit-

capacitors and they can also operate

based on accounting standards for ef-

tee oversees three working groups

in a wide temperature range. They

fective control. Nagano Japan Radio is

on business synergies, governance

do not ignite even when overcharged,a leading maker of power supply andand non-operational synergies, andmaking them extremely safe. Leverag-wireless devices. These two compa-

overseas strategy. In non-operational

ing these characteristics, we are work-

PT. NAIGAI SHIRTS INDONESIA

We established this company in July 2010 as a denim rope dyeing joint venture with capital of $6.5 million. Nisshinbo
Textile Inc. has a 49% stake in the company. Construction of a plant has already been completed and the company ispreparing product samples ahead of the start of full-scale production.

China NISSHINBO TEXTILE CHANGZHOU CO., LTD.

We established this company in July 2010 as a shirt fabric processing business with capital of 13.5 million yuan
(approximately ¥200 million). Nisshinbo Textile Inc. has a 100% stake in the company. A plant with a planned annual
output of 6 million meters of shirt fabric is currently under construction.

India VARDHMAN NISSHINBO GARMENTS CO., LTD.

We have established a shirt manufacturing joint venture with Vardhman Textiles Limited, India’s largest textiles maker.
Nisshinbo has invested around ¥150 million in the company, giving it a 49% stake. Construction of a plant has alreadybeen completed and the company is preparing samples ahead of the start of full-scale production. We are targeting annual production capacity of 1.8 million shirts.

Brazil NISSHINBO DO BRASIL INDUSTRIA TEXTIL LTDA.

We established this company in 1972. In response to growth in the Brazilian market, we plan to invest to install an
additional 11,000 spindles. The company currently has 69,000 spindles, with our expansion plans taking this to 72,000 in
July 2011 and then 80,000 in June 2013.

ing with a number of automakers
to develop them for use in the next
generation of vehicles.
The business synergy working

Automobile Brakes
China Nisshinbo Saeron (Changshu) Automotive Co., Ltd.

Aiming to tap into rapidly expanding automobile production in China, we established this company in February 2011 asa manufacturing joint venture with Saeron Automotive, a Nisshinbo subsidiary listed in South Korea. The company, basedin Changshu City in China’s Jiangsu Province, will produce and sell automotive brake friction materials. We are targeting a
production startup date of around autumn 2012. We plan to invest a total of 380 million yuan (around ¥5 billion), with afirst phase investment budget of 208 million yuan (around ¥2.8 billion).

group is looking at a number of otherpotential candidates for new products. By combining Nisshinbo’s chemical technologies and Japan Radio’s
electronics technologies, I believe we
can develop a strong range of products unrivalled by our competitorsthat will support a new phase of rapid
growth for the Group.

8

Precision Instruments
China

Nisshinbo-Yawei Precision Instruments & Machinery (Jiangsu) Co., Ltd.
We are expanding our presence in the Asian market for photovoltaic module manufacturing equipment, a promising
growth market. In June 2010, we increased our stake in this company from 25% to 58.2% after subscribing to a newshare issue, making it a consolidated subsidiary. We are currently increasing production capacity, targeting laminatoroutput of 30 units per month. We have budgeted total investment of 65 million yuan (around ¥900 million).

South Korea NISSHINBO PHOTOVOLTAIC KOREA CORPORATIONWe set up this local sales company in January 2011 to strengthen after-sales service and marketing. The company’s capitalis 200 million won (around ¥14 million).

9

Promoting Production and Sales in
Optimal Locations to Increase ROE

10Contributing to Society Through Our Business Activities

We are accelerating
moves into overseas
markets to boost ROE.

a result, our automobile brakes busi-

but exports to the increasingly active

ness only had four sites overseas—in

East Asian market have been driving

the US, Thailand, South Korea (Saeron

growth over the last few years. In re-

Automotive, a joint venture with asponse, we set up a sales and service

Our long-term financial targets are net

local company), and Beijing, China

center in Taiwan in 2009, and in thesales of at least ¥600 billion and ROE(a subsidiary of Saeron Automo-of over 9%. We are implementing

Our next growth drivers
lie in the environmental
and energy fields.

One of these areas is photo-and infrastructure fields has comevoltaic power generation systems, atogether in an effort to realize volume

growth business for Nisshinbo, andproduction of FCVs by 2015. I am

another is carbon bipolar plates for

excited about prospects here as well.

Another characteristic of Nisshinbo

fuel cells, part of our chemicals busi-

The chemicals business also

year under review, we increased ouris our efforts to contribute to society.

ness. These bipolar plates, which aresupplies a functional chemical calledtive). However, the auto sector map

investment in a joint venture in China

Our fundamental philosophy sincemainly used in residential fuel cells,

Carbodilite, which has become an

strategies to achieve these objectives

was redrawn after the financial crisis

to build a production facility. Also, in

the Company was established incurrently generate sales of less thanindispensable modifier to enhance theby the fiscal year ending March 2018.

triggered by the collapse of Lehman

January 2011, we opened a new sales

1907 has been to contribute to so-¥1.0 billion, but we are positioning

durability of bio-plastics. Bio-plastics

Organic growth is key to expand-

Brothers, with demand in China,

and service center in South Korea.

ciety through our business activities.

them as a future growth driver. Our

are made without using petrochemi-

ing our business, but external growth

India and other emerging markets

In plastic molding and process-Guided by this thinking, our policy

ultimate goal is to see our bipolarcals. Carbodilite has extremely low

driven by M&A deals such as the ac-

now driving global auto production

ing, also part of the precision instru-

is to channel management resources

plates adopted for use in fuel cell

toxicity and is competitive globally.

quisition of Japan Radio will becomeand more automakers appearing on

ments business, we set up a new

into areas that help resolve some ofvehicles (FCVs). In Japan, a group of

It has many potential applications,increasingly important. Also, in all our

the scene. We therefore decided toplant on land next to our subsidiary

the energy and environmental prob-

companies made up of automakers

and we expect it to be adopted morebusiness segments except real estate,establish a subsidiary in Changshu

in Thailand to produce fans for airlems we face today.

and leading players in the energy

widely going forward.

we are pushing ahead with the glo-

City in China’s Jiangsu Province as aconditioners amid growing demand,balization of operations in an effort tojoint venture with Saeron Automotive,

mainly from emerging markets. We

boost ROE. To raise ROE, we will needwith a commitment to invest a total

plan to bring the plant online during

to channel management resourcesof approximately ¥5.0 billion to build

the fiscal year ending March 2012.

into growth markets, businesses anda brake manufacturing plant. We are

I am confident that these ef-

products, and expand production sites

targeting autumn 2012 as the plant’s

forts to promote production and sales

while rapidly establishing sales networks

startup date and aim to boost ourin optimal locations, together within Asia, where we continue to enjoy

share of the growing Chinese auto

similar moves in the textiles business,growth. Against this backdrop, we

market from the current 5% to 20%.

will realize a structural change inachieved a number of successes dur-

In India, we plan to expand sales ofNisshinbo’s business and drive further

ing the year under review.

products equivalent in quality to those

globalization of our operations. Al-

In the automobile brakes busi-

made by Nisshinbo through a techno-though we are still in the investment

ness, as with the textiles business, we

logical partnership with RANE BRAKE

phase, I am excited about the devel-

made a concerted push into China.

LINING LIMITED, the country’s lead-

opments that lie ahead.

In the past, even if our Japanese

ing friction materials company and a

automaker customers were based

Nisshinbo equity-method affiliate.

overseas, the rational approach in

Meanwhile, in photovoltaic

the automobile brakes business was

module manufacturing equipment,

to manufacture the brakes in Japanthe main product in our precision in-and export them, due to the specificstruments business, we have a domi-

characteristics of the components. As

nant share of the domestic market,

The Nisshinbo Group’s Initiatives to Support Fuel-Cell Use
AIRElectronic
Control Unit

Hydrogen
CylinderHYDROGEN

Fuel Cells

Motor

Battery

CURRENT

H2
H2

H2
H2
H2

H2

WATER

H2

H2HydrogenH2
Storing
H2
H2
H2CarbonH2
H2
H2

Automotive fuelcells require
high-pressure hydrogen tanks, which
creates a number of technologicaland cost issues. Hydrogen-storing carbon reduces pressures inside storage
tanks, resulting in highly safe, lowcost hydrogen tanks.

CarbonAlloyCatalysts
Carbon alloy
catalysts boast
catalytic performance (open-circuit
voltage and output density) that is
at least as high as platinum, suppliesof which are concentrated in a few
countries. They also potentially costless than platinum catalysts.
5nm

CarbonBipolar
Plates
Bipolar plates
separate thehydrogen and oxygen in fuel cells andact as the electrode. Carbon bipolar
plates have outstanding corrosion resistance properties and have captured
a dominant share in the residential
fuel cell market.

Electric
DoubleLayer
Capacitors
Electric doublelayer capacitors are energy storage devices thathave many unique properties. They
are compact, lightweight, and offer
high power density. They can also
operate in a wide temperature range,
have a long operational life, and are
extremely safe.

11Overview of Business Segments

Pursuing Efficient Use of Cash to
Meet Shareholder Expectations
We are maximizing
capital efficiency.

a medical facility and a junior highlion of our own shares, with total cash

school. Under our three-year manage-

returned to shareholders (total divi-

ment plan, we forecast sales fromdends and share buybacks) exceeding

In the real estate business, we arereal estate disposals of approximately

net income during the last decade.

working to efficiently use land that¥12 billion. We plan to channel theseWe have also cancelled treasury stock,has been freed up through businessfunds into areas where we see large

with only around ¥2.6 billion on our

restructuring and the transfer ofpotential returns, namely the capitalbalance sheet as of March 31, 2011.

manufacturing sites. In the past, ourinvestment, R&D, and M&A themes I

In addition, in the current fiscal year,

strategy was to lease the land to com-have talked about so far, in order to

we spent roughly ¥2.6 billion on buy-

mercial facilities, but we began selling

boost Nisshinbo’s corporate value.

ing back the Nisshinbo shares held byland for residential building lots after

We are also focusing on share-

See

14

See

16

remaining available real estate fromour basic policy is to pay an annual

cash flow into high-margin businesses

the fiscal year ended March 2009.

dividend of ¥15 per share, with an

and actively returning profits to share-

In the year under review, weemphasis on dividend stability, but weholders in order to deliver growth andbooked sales of ¥6.1 billion from theare also actively buying back and retir-

boost value for shareholders. We will

sale of land at our former Harisaki

ing shares. In the last five years, we

continue to do our best to meet the

Plant, which will be used to build

have bought back a total of ¥38 bil-

expectations of all our shareholders.

See

18

12

Mainstay business is products made from natural cotton; supplies high-quality“Made by Nisshinbo” dress shirts, denim, uniforms, and other products tomarkets worldwide

10

20(billions of yen)

Net Sales

Automobile Brakes

11

Supplies automotive brake products underpinned by Nisshinbo’s track record andtrusted brand in the field; currently expanding its presence as a global supplier,with manufacturing bases in North America, South Korea, Thailand, and China

10(billions of yen)

Net Sales

Papers11

Makes high value-added products for everyday use such as toilet paper and otherhousehold paper products, specialty paper used in pamphlets and other materials,
and processed paper products such as telegram paper

10(billions of yen)

Net Sales

Precision Instruments

11

Supplies a wide range of products in the rapidly growing environmental andenergy fields, including photovoltaic module manufacturing equipment, airconditioner fans, and processed precision automotive parts

10(billions of yen)

Net Sales

Chemicals

11

Manufactures a range of highly promising products for the future, such as
Carbodilite, an additive used in bio-plastic manufacturing, and bipolar plates forfuel cells

10

That means having the courage togies and expertise to drive businessmove boldly into business areas thatdiversification is not enough for to-have no continuity with our existing

day’s dramatically changing business

operations, even fields where we lack

Over the years, we have developed aenvironment. Demands on compa-

experience, to deliver a new phase ofJapan Radio Co., Ltd.

range of new businesses that leveragenies from the state and society havegrowth for the Nisshinbo Group.

Electronics

11

the materials and technologies wealways changed over the years, but

Using the consolidation of Japan Radio, a pioneer in wireless communication
devices, to develop and reinforce its presence in power generation, storage, andcontrol in the energy business field10

have accumulated in the manufac-

now companies are being asked whatture of textiles, primarily cotton, ourthey can do to contribute to today’s

founding business. For example, ourmajor theme—sustainable develop-

automobile brakes business, which

ment. The days are gone in businessunderpins the Group’s profits today,

when there was a clear line connect-

SHIZUKA UZAWA

was created by transferring our skills

ing the past to the present, so we

President

in textile spinning. However, this ap-

need to raise our game as a company.

See

24

26

7.3

6.3
(billions of yen)

Net Sales

112.8

51.7
(billions of yen)

Net Sales

Nisshinbo Holdings Inc.
See

32.0

24.9

proach of applying existing technolo-

July 2011

31.1

31.5

We are disconnectingfrom the past to deliver
growth for the future.

22

46.1

41.0

Nisshinbo Chemical Inc.
See

57.4

53.2

Nisshinbo Mechatronics Inc.
See

The True Strength of a Company Lies in
Its Ability to Reignite Growth11

Nisshinbo Paper Products Inc.

In this way, we are redirecting

holder returns. At the moment,

TextilesNisshinbo Brake Inc.

Japan Radio.

shifting to a policy of selling our

Net Sales

Nisshinbo Textile Inc.

Real Estate11

Effectively utilizing idle assets created from the shift to operations overseas tosecure funds that support the Nisshinbo Group’s growth

10

12.4

6.3
(billions of yen)13

Overview

Textiles

Challenge 2012 Targets

Nisshinbo Textile Inc.

1. Establish optimal production and sales
structures through further expansion ofoverseas production sites in Indonesia,
India, China, and other countries and shift
production from Japan to reconstruct thebusiness on a global level.

(millions of yen)

2. Position domestic business sites astechnology development bases and focus
on the development of competitive new
products and technologies.

-1,500Since its founding in 1907, Nisshinbo has led the Japanese textile industry
with its state-of-the-art technologies and high quality. Nisshinbo expanded
its business into the spinning, weaving, processing, and sewing fields andpossesses some of the world’s most advanced technologies in areas ranging
from development to production. It is currently expanding overseas bases inIndonesia, India, China, and elsewhere and shifting domestic production abroadwhile reconstructing its domestic business to specialize in new product andtechnology development.

Summary of Financial Results for the
Fiscal Year Ended March

3. Use original processing technologies todevelop and market products that respondto market changes and customer needs.

500
0
-500
-1,000-2,000-2,500-3,000

2009

2010

2011

Domestic(3,830)(2,723)(800)

Overseas

854

302

822

Eliminations

70

202

161

(2,906)(2,220)

184

Total

Business Strategies and Outlook for
the Fiscal Year Ending March

2011

2012

In the fiscal year ended March 2011, our textiles businessthe capacity of our weaving mills in Japan was cut back to one

The Great East Japan Earthquake fortunately had only a limited

In addition, at our Brazilian subsidiary, where production

reported net sales of ¥57,400 million, up 7.9% from the previ-

tenth of the level in the previous fiscal year. Meanwhile, we

impact on our supply chain, and the segment’s results for theand sales are extremely strong, we plan to gradually increase theous year, and operating income of ¥184 million, the segment’s

took a number of steps to support the further development

fiscal year ended March 2011 were largely unaffected. How-

number of spindles by around 11,000 from the current fiscal year

first profit in four fiscal years and a sharp improvement fromof our business overseas. We established a denim rope dyeing

ever, in the current fiscal year, there are concerns of a further

onward, to approximately 80,000 by the end of June 2013.

the operating loss of ¥2,220 million in the previous year.

joint venture in Indonesia and set up a shirt fabric processing

decline in consumer spending, and weak sales of luxury goods

In new products, our plant in Tokushima has succeeded in

During the year under review, the recovery in domestic

company in China to carry out finishing. We also expanded ain particular could persist at department stores and other chan-developing conjugated yarn using proprietary polymer synthe-

consumer spending was sluggish and there was little sign of an

shirt manufacturing site in India and installed additional spin-

nels. Meanwhile, owing to power shortages in the summer,

sis technology, and we plan to launch the new product on the

improvement in apparel sales, particularly at department storesning capacity at an existing plant in Indonesia.

moves to save energy by restricting the use of air conditioning

market sometime during the current fiscal year. Also, using ourcould trigger demand for new types of business wear.

existing APOLLOCOT technology, we have developed non-ironin Japan. The strong recovery in the textiles business segment,

On the sales side of the business, APOLLOCOT 100%

despite this tough environment, reflected bolder efforts thancotton non-iron shirts, a new type of shirt made using unique

Sales of shirts, a practical clothing item, are likely to remainin the past to rebuild the business. Specifically, we integrated

processing technology, registered healthy sales on the back ofstrong in the current fiscal year. We will focus on rapidly startingtwo spinning and weaving plants at one location and sharply

strong product appeal.

up operations at NISSHINBO TEXTILE CHANGZHOU CO., LTD.

reduced the size of our processing plants while expanding

14

Segment Income

As a result of the above initiatives, the shirt, uniform, andhandkerchiefs, 100% cotton stretch knitwear, and a type of
stretchable nonwoven cotton material.

(our shirt fabric processing company in China) and on quickly

facilities overseas. We also ran a voluntary retirement program,other businesses in the segment exceeded their sales andenhancing the capabilities of our shirt manufacturing sites inwith a targeted quota of 150 employees retiring in the firstprofit targets.

India and Indonesia to drive further sales expansion for APOL-

half of the fiscal year. We also downsized facilities at other

However, sluggish department store sales in Japan had a ma-

LOCOT cotton shirts. At PT. Naigai Shirts Indonesia, we plandomestic business sites to convert them into research andjor impact on CHOYA and the knit products and fabrics business,to build a new plant to expand shirt production facilities. Thisdevelopment bases. As a result of these moves, the number

while the denim business also struggled in the face of an ongoingGroup company currently has the capacity to produce 720,000of spindles at our domestic spinning facilities declined fromcontraction in the domestic jeans market. We are targeting a rapid

standard shirts each year, but this move will give it the capac-

approximately 81,000 at the end of the previous fiscal year to

upturn in profits in these businesses by launching new products

ity to manufacture an additional 840,000 APOLLOCOT shirts

around 12,000 at the end of the fiscal year under review, whileand shifting to a global manufacturing and sales structure.

annually by December 2011.

APOLLOCOT
100% cotton non-iron shirt

15

Overview

Automobile Brakes

Challenge 2012 Targets

Nisshinbo Brake Inc.

1. Expand business by implementing global
business strategies that take local market
characteristics into account.

Nisshinbo has become a global supplier with world-class development
capabilities in the field of friction materials, which are key components
of automobile brake systems. With “customer first” and “continuous
improvement” as our main quality policies, Nisshinbo meets the procurement
needs of the world’s automakers through technological advancement andglobal business development.

Summary of Financial Results for
the Fiscal Year Ended March

3. Conduct comprehensive inspections ofquality control systems and reinforce
supply chain management (SCM) to
maintain the high reliability of these
crucial safety products.

6,000
5,000
4,000
3,000
2,000
1,000
0

2009

2010

2011

Domestic

976

2,959

2,751

Overseas

2,405

1,135

2,279

Eliminations

86

(215)

61

3,467

3,880

5,090

Total

2012

We implemented a number of initiatives in the segment

The Great East Japan Earthquake probably had a larger impact

Automotive Co., Ltd. in Changshu City, Jiangsu Province to tap

business reported net sales of ¥46,119 million, up 12.4%

during the fiscal year, including a merger to absorb subsidi-

on the automobile brakes business than any other business

into rapidly expanding local automobile production in China.

from the previous year, and operating income of ¥5,090 mil-ary Nisshinbo Brake Sales Co., Ltd. in April 2010, which has

segment in the Nisshinbo Group. In the fiscal year ended

Mass production is scheduled to start from autumn 2012.

lion, up 31.2%.

enabled more dynamic business execution and rapid decision

March 2011, the business incurred disaster-related extraordi-

Nisshinbo Saeron�(Changshu)�Automotive is a joint venture

During the year under review, automobile sales volume

making. This company was previously responsible for all brakenary losses of ¥41 million, owing to a slump in orders whenbetween Nisshinbo and Korean company Saeron Automotive

increased in Japan and overseas, with domestic output risingproduct marketing and sales activities in the domestic market.

automakers suspended some production activities immediately

Corp. in which Nisshinbo has a 67.8% stake. We also plan to

21% from the previous year amid a strong business environ-

We also continued our efforts, triggered by the sharp drop in

after the earthquake. We expect demand in Japan to remain

strengthen our partnership with Indian company Rane Brake

ment in the sector. Orders grew until the second quarter ofdemand after the collapse of Lehman Brothers, to reduce theweak until operations return to normal at the automakers.

Lining Ltd. as part of efforts to boost sales in the Indian mar-the fiscal year on the back of rising domestic automobile sales

automobile brakes business’s breakeven point by 30% com-

Although the disaster had almost no impact on our operations

ket. Nisshinbo also has a 20.15% stake in this company.

supported by tax incentives and subsidies for eco-cars. How-

pared with the fiscal year ended March 2008. This contributed

overseas in March, the impact of halts to production by auto-

ever, although orders from the third quarter were affected by

to profit growth. The outlook for the automobile market ismakers spread to our overseas sites from April, leading to aoping products that are compatible with new US regulations

a fallback in demand after the end of eco-car subsidies anduncertain again owing to the Great East

decline in orders. The pessimistic view to emerge immediately

on friction material copper content.* With other countries

the suspension of production activities at automakers due toJapan Earthquake in March 2011,

after the earthquake was that the impact would be prolonged,

around the world expected to adopt similar regulations, we

the Great East Japan Earthquake, sales increased over the fullso we intend to step up

but this is now being revised slightly and some automakers areare working on research and development themes for newyear, supported by buoyant exports.

our efforts across the

now forecasting a pickup in the second half of the fiscal year.

friction materials. Also, we are putting priority on purchasing

Group to reduce theWe plan to continue monitoring trends in the industry and at

raw materials, components, secondary materials, and auxiliary

breakeven point.

individual automakers, while at the same time taking steps tomaterials with minimal environmental impact as part of green

minimize any potential impact.

procurement activities.

Sales increased at all our overseas business sites thanks to
growing demand in China and other emerging markets and amoderate recovery in demand in the US. A number of factors
weighed on profits, such as higher costs for imported materials

Despite this environment, we intend to continue rolling

due to the strong yen from June, but the integration of someout our global strategy for the automobile brakes business. In

subsidiaries led to an improvement in profit margins.

16

2. Develop original products with highprice competitiveness that take customer
needs and the global environment
into consideration. Also, establish
development structures based on futuretechnology trends, such as electronic
control of brakes.

(millions of yen)

Business Strategies and Outlook for
the Fiscal Year Ending March2011

In the fiscal year ended March 2011, the automobile brakes

Segment Income

Disc padFebruary 2011, we established Nisshinbo Saeron (Changshu)

In research and development, we are focusing on devel-* The US state of California has passed a law, effective from 2021, prohibiting the sale of new friction materials or vehicles fitted with friction materials that have a copper content of more than 5%. From 2023, the limit on
copper content will be reduced to no more than 0.5%.

17Overview

PapersChallenge 2012 Targets

Nisshinbo Paper Products Inc.

1. Reinforce and develop sales andproduction systems tailored to customer
needs in the household, specialty, andprocessed paper product business lines.

Nisshinbo supplies high added-value paper products that match market needsin three fields: household paper products, specialty paper, and processed
paper products. Based on the concept of environment- and people-friendly
manufacturing, in the household products segment we developed the world’s
first highly absorbent bathroom tissue paper designed for use with bidets andlaunched ﬂushable paper wipes for the nursing care market; in the specialty
paper segment we supply top-quality printing paper products such as VENTNOUVEAU for the ﬁne paper ﬁeld and a new product called KI•HOU•SHI, mainly
aimed at creating new markets in the packaging field; and in the processed paper
products segment we sell telegram paper, luxury packaging, and other products.

2. Develop new products, enhance design
and planning capabilities to distinguishour products, and reinforce alliances withother companies.

Summary of Financial Results for
the Fiscal Year Ended March

3. Reinforce alliances with overseas
companies through OEM arrangements
and capital tie-ups to promote production
and sales in optimal locations.

Segment Income(millions of yen)
2,000

1,500

1,000

500

0

-500

2009

2010

2011

Household

(32)

1,077

(646)

Fine Papers

805

739

618

Eliminations

7

(110)

(103)

780

1,706

(131)

Total

2011

Business Strategies and Outlook for
the Fiscal Year Ending MarchIn the fiscal year ended March 2011, the paper products business

The Great East Japan Earthquake damaged some of the paper

In household paper products, we are strengthening ourreported net sales of ¥31,122 million, down 1.3% from the pre-products business’s inventories but none of its facilities was

supply framework in Japan and overseas as part of our efforts

our range of telegram-related products and manufacture andvious year, and an operating loss of ¥131 million, with operating

affected. Operations continued largely as normal.

to become a household paper product trading business with asell luxury packaging products such as cosmetics boxes, mainly

manufacturing base. In the current fiscal year, we are working

in Asia, as part of our global strategy. In the current fiscal

pact of the earthquake on production activities due to plannedto achieve our sales and profit targets by achieving appro-

year, we are targeting sales and profit growth by stepping up

prices for household paper products due to deflation andpower blackouts and material procurement constraints, but

priate prices for our products to support a sustainable busi-

business initiatives in China and working to expand sales ofconsumer preference for low-priced products, as well as an

we plan to respond flexibly to the situation by increasing theness, boosting sales of value-added products, and efficiently

packaging products in Japan and overseas to cover the slump

increase in manufacturing costs owing to higher prices for pulp

efficiency of plants and sourcing alternative materials. Mean-leveraging capital investment at Group company Tokai Seishi

in sales of existing products due to the earthquake. We also

and crude oil. In specialty paper, products such as fine paper

while, we expect sales to be affected owing to weak consumer

Kougyou Co., Ltd.

plan to reinforce quality assurance management systems tofor printing staged a recovery, but an increase in raw material

spending in Japan and lower demand in the disaster-affected

In specialty paper, we are developing our business over-costs due to the rise in pulp prices and changes in the productregion as a result of the earthquake. These factors, togetherseas, centered on East Asia, and planning moves into periph-

mix led to a decline in profits, despite steady sales year on year.

with higher raw material costs due to rising pulp and crude oil

eral business fields in Japan. In the current fiscal year, we are

In processed paper products, earnings were buoyant thanks toprices, and falling demand centered on the commercial printing

focusing on exports, mainly to South Korea, while in Japan, we

strong sales of photo mounts, packaging products, and printersector, are likely to result in a tough operating environment.

are working to boost sales of existing products and cultivate

income deteriorating ¥1,837 million from the previous year.
This deterioration in earnings was caused by falling sales

products, and benefits from restructuring in the label business.

2012

In the current fiscal year, we are concerned about the im-

Against this backdrop, we are implementing the following

new applications for our products, primarily in the packaging

key initiatives in each business in order to achieve our medium-

field. We are also creating new products based on an integrat-term business targets and our earnings targets for the current

ed approach to products, sales, and development.

In processed paper products, we will expand and upgrade

underpin business expansion.
KI•HOU•SHI: a new paper productaimed at the packaging field

fiscal year.

Flushable paper wipes forthe nursing care market

1819Overview

Precision Instruments

Challenge 2012 Targets

Nisshinbo Mechatronics Inc.

1. Develop the photovoltaic module
manufacturing equipment business on a
global scale with a focus on East Asia.

Utilizing the know-how it has accumulated over more than half a century
as a machine tool maker supporting various manufacturing industries,
Nisshinbo is focusing on three businesses: manufacturing equipment forphotovoltaic modules, which are seen as a promising source of clean energy;
precision automotive parts, which help improve the safety and environmental
performance of cars; and plastic molding and processing, primarily fans for air
conditioners. We are developing these businesses globally, centered on Asia.
Our aim in the photovoltaic module manufacturing equipment business is tobuild a total solutions business model.

Summary of Financial Results for
the Fiscal Year Ended March(millions of yen)
2,000

1,500

2. Expand the photovoltaic module businessas a total solution business that integrates materials, manufacturing equipment, and consulting on ideal processing
conditions.

1,000

500

0

-500

-1,000

2009

2011

2010

1,395

(583)

741

Plastics

452

57

672

Total

1,847

(526)

1,414

Mechatronics

Business Strategies and Outlook for
the Fiscal Year Ending March

2011

2012

In the fiscal year ended March 2011, the precision instruments

Key initiatives in the photovoltaic module manufacturing

The Great East Japan Earthquake had only a small impact onmaterials. We have set up a dedicated division within Nisshin-business reported net sales of ¥32,020 million, up 28.6% fromequipment business included additional investment in Nisshin-

our photovoltaic module manufacturing equipment and plasticbo Holdings, High-reliability Material Group, to bring together

the previous year. The business moved into the black at thebo-Yawei Precision Instruments & Machinery (Jiangsu) Co.,

molding and processing plants. However, shipments in our

the Group’s expertise on this kind of new material and productoperating level with operating income of ¥1,414 million, an

Ltd., a joint venture in Jiangsu Province, China, in June 2010.

precision automotive parts processing business declined owing

and to head development.

improvement of ¥1,940 million from the previous year.

This further investment made the company into a consolidated

to the suspension or reduction of operations at automakers as

In precision parts processing for the automotive sector, we

In the year under review, earnings were weak owing to

subsidiary and marked the start of full-scale manufacturing

a result of the earthquake. In response, we worked to reduce

plan to start up a new manufacturing site in Shanghai, China,

sluggish demand for specialized machine tools for the automo-

and sales activities for photovoltaic module manufacturingcosts by suspending production on some lines, promoting

by the fiscal year ending March 2016 to tap into expansion intive and aerospace industries. However, the mainstay photo-

equipment in China. The subsidiary’s Jiangsu Plant, which

work sharing, and limiting overtime. We expect the businessthe global market. We will begin installing new manufacturing

voltaic module manufacturing equipment business secured

came on stream in April 2011, has the capacity to manufacture

environment to improve through to the end of the fiscal year

equipment at the site in the current fiscal year. In air condi-

orders on the back of major investment by domestic photo-around 30 module laminators per month, tripling Nisshinbo’s

but we intend to monitor trends here closely.

tioner fans, the mainstay product in our plastic molding andvoltaic module makers and exports of our equipment rose to

production capacity. Meanwhile, we enhanced our after-sales

In the precision instruments business, we are putting

processing business, we intend to boost production in Thailand

East Asia and India. Together with cost reduction, this support-

service in South Korea with the establishment of sales com-

the highest priority on expanding the production and sale ofby opening a new plant and expanding facilities at an existinged a strong performance in the photovoltaic module manu-pany Nisshinbo Photovoltaic Korea Corp. in January 2011.

photovoltaic module manufacturing equipment on a global

plant by the fiscal year ending March 2013. Construction on

facturing equipment business. Also, earnings rose in precisionbasis, with a focus on East Asia. To achieve this objective, we

the new plant will begin in the cur-parts processing for the automotive sector (ABS components)

are working to strengthen our operating framework so that

rent fiscal year. This additional

we can further expand output and sales in China and Taiwan,

capacity will support efforts

owing to a recovery in demand at customers and cost reduction. In plastic molding and processing, sales and profits both

20

Segment Income

Module laminatorboost quality, and raise customer satisfaction. Also, we are

to boost sales, mainly in East

increased from the previous year due to a strong performance

aiming to rapidly launch standard models as part of our globalAsia.

in mainstay air conditioner fans. Demand was spurred by thestrategy. Meanwhile, we plan to expand our photovoltaic-

hot summer in Japan, government subsidies, and rising de-related business by shifting to a total solutions business model,

mand in Southeast Asia.

starting with the development of new long-life encapsulation

Plastic molding parts

21

Overview

Chemicals

Challenge 2012 Targets

Nisshinbo Chemical Inc.

1. Use expertise in the chemicals businessto actively develop environment-related
businesses.

Segment Income

Summary of Financial Results for the
Fiscal Year Ended March

0

-500

2. Reinforce face-to-face customer
interactions and develop original products.

Utilizing its know-how in the chemicals field, Nisshinbo is working on a daily
basis to help realize a low-carbon society. Our products, such as bipolar plates forfuel cells, Carbodilite, which is a high-performance resin material with uniquecharacteristics (such as its ability to increase the durability of bio-plastics),
and electric double-layer capacitors, will play an essential role in the uptake ofenvironment-related products. We are investing management resources in thesepromising growth areas as a matter of priority.

(millions of yen)

3. Expand sales of strategic products,
including bipolar plates for fuel cells andCarbodilite high-performance resin.
4. Expand the capacitor business to include
automotive applications.

-1,000-1,500-2,000

2009

2011

2010

Urethane, etc.

299

403

561

Environmental &Energy Business(2,284)

(916)

(925)

Others(5)061Eliminations

2

1

9

(1,988)

(513)

(295)

Total

Business Strategies and Outlook for
the Fiscal Year Ending March

2011

2012

In the fiscal year ended March 2011, the chemicals businessIn environment- and energy-related products, there was a

There was only light damage to manufacturing facilities in this2011 committing to the full-scale launch of fuel cell vehicles

reported net sales of ¥7,284 million, up 15.5% from the previ-

recovery in domestic and overseas orders for functional chemi-

segment as a result of the Great East Japan Earthquake and(FCVs) from 2015. We plan to utilize the expertise accumulated

ous year, and an operating loss of ¥295 million, an improve-

cal Carbodilite, driving an improvement in profits.

almost no impact on operations. However, we had problems

from our dominant share in the household fuel cell market inment in operating income of ¥218 million from the previous

Losses in the electric double-layer capacitor businesssourcing certain chemical raw materials, which unfortunatelyorder to develop bipolar plates that are becoming the de-facto

year. This business supplies chemical-related products such as

decreased on the back of a recovery in sales to the industrial

led to delays for some of our customers. Although we expect

standard in the FCV market as well.

thermal insulation products, carbon products, and elastomer

machinery sector and new product launches. However, sales ofdemand for our products from the automotive sector to decline,

Meanwhile, we will work to boost sales of Carbodilite

products, which are a stable source of income, and promis-

bipolar plates for fuel cells struggled, mainly due to a reduction

the impact is likely to be minimal due to strong demand fromin the bio-plastic market and in the photovoltaic panel field,

ing environment- and energy-related products such as bipolarin subsidies for the purchase of household fuel cells.

the building materials sector on the back of rebuilding demand.

where new applications have emerged.

plates for fuel cells, electric double-layer capacitors, and func-

In the fiscal year ending March 2012, we plan to continue
working to boost sales of new environment-related products

tional chemicals.
In thermal insulation products, orders increased for stockand new products carefully tailored to customer needs. We

solution products for onsite foaming used in the cold chain

have launched a wide range of new products, including non-field, supporting stable earnings. Sales and profits rose in car-fluorocarbon stock solution products that are foamed onsite

bon products due to a market recovery in the semiconductor

and do not generate greenhouse gases, and water treatment

sector and emerging benefits from cost reduction. However,products. We are also focusing on developing new functionalsales and profits both declined in elastomer products due tochemical products.

High-performance chemical product CARBODILITE

In bipolar plates for fuel cells, we see growing prospects

tough competition with overseas products.

for market growth in the automotive sector following a joint
declaration by three automakers, 10 energy companies, andthe Ministry of Economy, Trade, and Industry (METI) in January
Urethane elastomer NISSHINBO MOBILON

22

23

Overview

Electronics

Segment Income(millions of yen)Japan Radio Co., Ltd.

8,000
6,000
4,000
2,000
0
-2,000-4,0002009

Nisshinbo has been involved in the semiconductor, electronic device, andcommunication fields through subsidiaries New Japan Radio Co., Ltd. and Ueda
Japan Radio Co., Ltd. In December 2010, we made leading communications
company Japan Radio Co., Ltd. a consolidated subsidiary through a tender offer.
As a result, Nagano Japan Radio Co., Ltd. also became a consolidated subsidiary.
This acquisition means the electronics business segment now comprises four
companies and has expanded considerably to become our largest segment.

Summary of Financial Results for
the Fiscal Year Ended March

2011

2011

2010
—

—

4,829

(4,364)(2,755)761

Nagano Japan Radio

—

—

538

Ueda Japan Radio

442

82

340

4

19

(285)

(3,918)(2,654)

6,184

Japan RadioNew Japan Radio

Eliminations
Total

Business Strategies and Outlook for
the Fiscal Year Ending March2012

In the fiscal year ended March 2011, the electronics businessAll four companies in the segment fortunately experienced

to respond to the increasingly advanced and diversifying needs

Japan Radio. We plan to further deepen these technologicalreported net sales of ¥112,820 million, up 118.2% from theonly minimal direct damage from the Great East Japan Earth-of the energy sector. Nisshinbo and Japan Radio had a close

ties so that we can create systems that increase fuel efficiency,

previous year, and operating income of ¥6,184 million, an

quake. The supply capacity of suppliers has declined since therelationship prior to the merger, so we expect the integrationin addition to electric storage devices. This will allow us to

improvement of ¥8,838 million.

earthquake, causing procurement problems for some com-of our respective corporate cultures to go smoothly.

enhance our proposal capabilities for automotive clients. In ad-

ponents, but we are working to mitigate the impact of theseWe are now focusing on realizing synergies with Japandition, we plan to develop new and innovative products in thescope of consolidation from the fourth quarter, leading to a

supply chain problems on our production activities. However,Radio as quickly as possible. In terms of synergies in non-oper-

automotive field that boost fuel efficiency, safety and comfort,

sharp increase in both sales and profits.

Japan Radio and Nagano Japan Radio were included in thewith some of our customers suspending or delaying projects,

ational areas, we estimate that annual cost savings of several

and also move into the smart city and smart grid business ar-

New Japan Radio, previously the main company in this

there is a distinct possibility that demand will decline amid ahundred million yen are achievable through asset reduction

eas in the environmental field. In materials, we possess promis-

business segment, also returned to profit. This strong perform-

slowdown in the domestic economy. Based on this outlook,and lower interest payments, with these savings being real-

ing new functional materials in theance, despite the impact of sharp yen appreciation and theeach company in the segment will strive to generate profits byized relatively quickly. A more important area for generating

electronics business segment

Great East Japan Earthquake, reflected a number of factors:

developing new products, rolling out new businesses, expand-synergies will be developing new businesses based on eventhat are viable candidates forsteady improvement in demand for the company’s products,

ing overseas sales, and implementing further cost reductions.

closer integration of our respective technologies. For example,

new businesses.

primarily mainstay semiconductors, buoyant OEM production

Our decision to acquire Japan Radio was based on the

our electric double-layer capacitor business has been built onview that it will benefit both companies by boosting corporate

Nisshinbo’s chemical technology, ionic liquid in this case, andtional amplifiers and power

value. We plan to achieve this by combining Japan Radio’s

the electronic control technologies of Japan Radio and Nagano

supply ICs, and further

wireless communication and control technologies with ourefficiency gains andexpertise in environmental and energy technologies, helping us

and sales, strong sales of opera-

rationalization across allareas of the business.
MUSES Series: high quality sound 2-channel
electronic volume

24

Solid-state RADAR

25

Overview

CSR ACTIVITIESReal Estate

Challenge 2012 Targets

Nisshinbo
Holdings Inc.

Slim up properties by sellingout idle real estate andthen invest the funds inlaunching new businesses
and expanding businesses in
Asian countries.

A desire to contribute to society through our business activities
underpins everything we do at the Nisshinbo Group. We will continue
to do our best to help improve the lives of people worldwide while
increasing Nisshinbo’s value as an environmental company.

Segment Income(millions of yen)
12,000Nisshinbo’s real estate business is active in theredevelopment of business property that has
become idle as a result of business changes byGroup companies, as well as the leasing of officeand commercial facilities and the sale of residentialbuilding lots. The income is used as capital to launch
new businesses and develop the Group’s operations
globally. Many of the idle properties and facilities
located throughout Japan have high asset values andcan be used for a wide range of purposes, including
shopping centers and offices.

Corporate Principles of
the Nisshinbo Group

10,000
8,000
6,000
4,000

Corporate Philosophy of
the Nisshinbo Group

2,000
0

2009

2010

2011
Corporate Code of Conduct

Summary of Financial Results for
the Fiscal Year Ended MarchBusiness Strategies and Outlook for
the Fiscal Year Ending MarchIn the fiscal year ended March 2011, the real estate business

The Great East Japan Earthquake damaged the structures andreported net sales of ¥12,437 million, up 97.5% from thefacilities of some of our rental commercial properties. However,previous year, and operating income of ¥10,191 million, up

damage was limited, and the earthquake had almost no impact

70.3%. Sales rose sharply on the back of rental income andon the segment’s results for the fiscal year ended March 2011.

2011

sales of subdivided lots at the site of the former Harisaki Plant.

2012

In the real estate business, we plan to aggressively develop

The rental business generated strong rental income fromthe building lot sales business, acting as the lead developer forlarge-scale commercial facilities. During the fiscal year undersite preparation work and collaborating with housing builders

review, we began leasing land to a volume retailer at ourand others to subdivide and sell residential building lots.

Shimada Plant site and started renting out an office building

Many of the properties that we own are located in urban

in Tokyo. In the building lot sales business, we sold residential

areas close to train stations and therefore have high as-

lots at the site of the former Hamamatsu Plant and sold land

set values. By acting as the lead developer, we can conduct

for public use at the former Harisaki Plant site as part of ourintegrated planning and development of entire areas, making

redevelopment of the area into residential building lots.

it possible to create high-quality communities that take into
consideration the environment and security.

Environment Charter

Medium-term Management Plan

Product Safety Charter

Corporate Principles of the Nisshinbo Group
Public Entity: We shall contribute to human society through our business activities.
Consistent Integrity: We shall respond to stake holders with honesty and integrity.
Innovation: We shall create the future through continuous innovation.

Corporate Philosophy of the Nisshinbo Group• As the eco-company, we shall contribute broadly toward enhancing the comfortable lifestyles andcultures of people around the world.

site, include redeveloping the former Kawagoe Plant site and• We shall aim to conduct business activities with honesty and integrity as our social responsibility
based on the belief that companies are public entity.

Nagoya Plant site into building lots.

• We shall constantly aim to raise corporate value and become a corporate group with a strong presence.

Other major projects, in addition to the Harisaki Plant

26

Human Rights Charter27

Corporate GovernanceCorporate Code of Conduct

Based on our belief that corporations are public entities, the Nisshinbo Group adheres to its

Fulfilling our corporate social responsibility (CSR) as a company is vital to ensure that thefundamental stance of always acting with integrity and in good faith toward its stakeholders.

public retains its trust in Nisshinbo.

Reflecting this in our corporate governance activities, we work to ensure the transparency of

Our Corporate Code of Conduct forms the underlying principles of our CSR activities.
The code ensures that every one of our employees clearly understands that Nisshinbo has amanagement, reinforce accountability, and act ethically in all matters.

responsibility to contribute to society through its business activities, giving them an aware-

Corporate Governance Structureness of CSR that allows them to actively take their own initiative.

Nisshinbo has adopted a managing officer system in order to speed up decision-making withrespect to business execution. The Board of Directors has 13 members, three of whom areoutside directors (as of June 29, 2011). Of the 13 directors, nine are also managing officers.

Corporate Code of Conduct
The Nisshinbo Group is deeply aware that companies are public entity, and that, while they are business entities pursuing economic aims such as the creation of added value through fair competition and the creation of employment opportunities, their
mission is to widely contribute to society through their corporate activities. For that purpose, both domestically and internationally, we shall respect human rights, observe related legislation and international rules and the spirit behind them, and act
on the basis of the following 10 principles toward the creation of a sustainable society with consistent integrity as our fundamental creed.
1. Giving proper consideration to safety, we shall develop and supply socially beneficial products and services
and obtain the satisfaction and trust of consumers and clients.
2. In a spirit of accountability, we shall engage in fair, transparent, and open competition and proper business
transactions. We shall also maintain sound and healthy relations with political and government organizations.
3. As well as with shareholders, we shall engage in wide-ranging communication with society and disclose corporate information positively and fairly. We shall also endeavor to ensure the protection of personal information and client information through proper data management.
4. We shall respect the diversity, character, and individuality of employees, ensure a safe and work-friendly environment for them, and realize their comfort and affluence.
5. We recognize that efforts to address environmental problems are a common issue for humankind and an
essential condition for the existence and activities of the Nisshinbo Group, and we shall take the initiative inthis regard.
6. We shall actively engage in social contribution activities as a good corporate citizen.
7. We shall resolutely resist any antisocial forces or organizations that pose a threat to the order and safety ofcivil society and shall have no links to such organizations.
8. Responding to the globalization of business activities, and complying with international rules and local legislation,
we shall engage in management that respects regional culture and customs, takes the interests of the respective
stakeholders into consideration, and contributes to the respective national and regional economic development.
9. The top management of Nisshinbo Group companies recognizes that it is our duty to realize the spirit of thischarter and, by setting a good example, to effectively disseminate it throughout the Group and promote it
to business partners. Furthermore, we shall constantly monitor opinions both inside and outside the Group,
establish an effective in-house setup, and thoroughly imbue corporate ethics.
10. If a situation arises that appears to violate this charter, the top management of Nisshinbo Group companies
shall make clear both internally and externally our position of solving the problem and shall endeavor toinvestigate the causes and prevent a recurrence. Furthermore, the top management shall execute the disclosure of speedy and accurate information and accountability to the public and, after clarifying authority andresponsibility, undertake strict penalties, including upon ourselves.

28

Nisshinbo has also established an Executive Officers Conference made up of all 12 managing officers, including the three who are not directors. Directors also take part in meetings,
which are held to discuss important matters related to business execution at the Company
and the Group as a whole.
The Board of Directors discusses important corporate matters, reviews executive decisions,and fulfills other responsibilities.
Drawing on their extensive knowledge and experience, outside directors monitor the
management of the Company from an objective and independent perspective. This serves
to strengthen the supervisory functions of the Board of Directors and enhance management transparency.

Corporate Governance Structure

General Shareholders Meeting
Board of Directors
13 Directors

Board of Auditors(including three outside directors)

Financial Auditors

Four Statutory Auditors(including two outside auditors)

Representative Directors

Internal Audit Department

Executive Officers ConferenceManaging Officers, Business Divisions, Group Companies
Audit Functions
Nisshinbo has established a Board of Auditors comprising four statutory corporate auditors,
two of whom are outside auditors.
The auditors monitor the directors’ execution of their responsibilities as well as operations
and financial conditions at the Company and its subsidiaries. The two outside auditors attended every Board of Directors meeting (16) and every Board of Auditors meeting (13) heldin the fiscal year ended March 2011 and were active in presenting their opinions.
The Board of Auditors works closely with the Audit Office, which is the Company’s Internal Audit Department, to ensure business is conducted in an appropriate manner.

29

Internal Audit Department

Major risk areas

Nisshinbo has established an Audit Office independent from executive business functions

Internal risks

Product quality and labeling, environmental pollution, workplace
accidents, human rights and labor issues, information leaks, IT system
failures, legal infringements

External risks

Damage from natural disasters, accidents or damage at business
partners, sharp fluctuations in exchange rates, targeted accumulation of
the Company’s stock, product liability lawsuits

to act as the Internal Audit Department. The Audit Office conducts audits of operations
throughout the entire Nisshinbo Group, including reviews of all relevant documents andaccount ledgers. It also works to protect the Company’s assets and increase management
efficiency by providing advice and proposals for remedial measures from a legal and rational
perspective. The Audit Office continually works with the corporate and financial auditors tomake audits more appropriate and effective.

Crisis Management System

Timely Information Disclosure

Nisshinbo has created a system for times of crisis under which response task forces will be

The Company holds briefings for all of its shareholders and investors on a regular basis. It

created at the Company and subsidiary companies (excluding listed subsidiaries in Japan).

also publishes convocation and resolution notices for the General Shareholders Meeting,

The authority to direct each task force is placed in the hands of the president of thefinancial results, business reports, securities reports, annual reports, press releases and other

Company. Regular drills and inspections take place to ensure that the crisis management

information on a timely basis via its corporate website, and constantly works to improve thesystem can perform as expected.

provision of information to stakeholders.

Maintaining Internal Control Systems

For example, each year the Company conducts emergency contact drills to ensure it has
the ability to verify the safety of all its employees and restore operations rapidly in the eventof an emergency such as a major earthquake.
Water discharge drill

Nisshinbo endeavors to create a healthy corporate culture in accordance with the Corporate
Principles of the Nisshinbo Group and the Corporate Philosophy of the Nisshinbo Group. An

Disaster Prevention Systeminternal control system has been established to identify and then remedy any issues in busi-

Firefighting teams at each Group business site conduct drills to improve disaster prevention

ness execution processes.

capabilities. These drills increase readiness for early-stage fires, earthquakes, and life-saving
situations. The teams also prepare for potential emergencies such as gas or chemical leaks inInternal Control System Reporting Related to Financial Reporting

accordance with the type and location of each business site.

Companies have been obligated since the fiscal year ended March 2009 to submit reports on

In addition, every year managing officers conduct inspections at major business sites,

internal controls in order to ensure the reliability of financial statements. The Nisshinbo Group

including those of subsidiaries, in order to energize disaster prevention management activi-

established group regulations in response to this development and developed a Group-wideties. In the fiscal year ended March 2011, managing officers inspected 14 business sites.

system of internal controls.
During the system’s third year of operation, the fiscal year ended March 2011, the Inter-

Initiatives to Protect Personal Information

nal Audit Department assessed the operational status of the internal control systems in each

To ensure important information related to customers and employees is managed in anGroup company to confirm their effectiveness.

appropriate manner, the Company conducts regular internal audits each year in accordance

An exercise using oil fences to prevent
leaks of heavy oilwith internal regulations and constantly works to improve data management. Nisshinbo’s

Risk Management

privacy policy on personal information can be viewed on the corporate website.

The Nisshinbo Group engages in risk management activities in order to minimize various

being accessed by external parties.

risks. In risk management, we believe it is important to develop measures for preventing risk
and measures to respond in a timely manner should a problem occur.

The Company has stringent measures in place to prevent this important information from

Initiatives to Ensure Information Security

Quick response measures include the creation of Crisis Management Regulations to

The Nisshinbo Group is constantly improving information security measures to prevent leaks of

respond to a crisis such as a major earthquake. In order to (1) minimize damage, (2) ensure

important personal information about customers and trade secrets. We are addressing infor-

the continuity of business through rapid recovery, and (3) contribute to the rapid recovery ofmation security through measures to manage both information systems and the people who

the community when a crisis occurs, we will strive to (i) put a premium on human life, (ii) act

operate them.

in ways befitting a responsible corporation, (iii) collaborate with governmental bodies andbusiness partners, and (iv) give fullest consideration to our community and neighbors.

On our information systems, we are reinforcing monitoring of the network sharedthroughout the Group. We are also tightening oversight of the data that employees are allowed to take out of company offices.
In addition to the aforementioned measures, we conduct annual internal audits andcontinually improve our control systems to protect personal information and manage trade30

31

secrets. In addition to measures for handling leaks of confidential Group information, measures

The Corporate Ethics Reporting System was created to rapidly identify and prevent

have been devised to prevent confidential information from being brought in, and we arepotential legal violations. Group employees and external parties can submit reports to theendeavoring to prevent the intellectual property of third parties from being infringed. We aresystem, which can be used to communicate directly with the Corporate Ethics Committee

also working to ensure our key computer servers can operate 24 hours a day, 365 days a year

or an outside corporate attorney. The confidentiality of persons making reports is strictly

by locating them in a safe facility that is resistant to major earthquakes and other disasters.

guaranteed and every effort is made to prevent any prejudicial treatment toward them.
Reports are dealt with by the Corporate Ethics Committee.

TopicsCorporate Ethics Reporting System

Recovery efforts after the Great East Japan Earthquake

Nisshinbo Holdings Inc.

We would like to extend our condolences to all those who
were affected by the disaster.

Board of Directors

After the earthquake, the Nisshinbo Group rapidly set up a disaster response headquarters headed by the president and worked to gather information on the situation.
Some buildings and equipment at the Group’s business sites were damaged, but
fortunately there were no serious injuries or loss of life. The Group restored and verified
the operation of facilities at production sites, gradually bringing them back on stream. By
March 14, all production sites were operating again.
However, extensive damage from the earthquake and tsunami, as well as the nuclear
accident and resulting power shortages, disrupted the procurement of raw materials andother supplies, which affected the Group’s production and distribution activities.
The Great East Japan Earthquake has prompted us to review the Group’s entire disaster response plans, including the disaster prevention system, disaster risk assessment, andinitiatives to ensure the continued safe and reliable operation of our supply framework.
Support for the disaster region
In order to do our part to support those affected by the disaster and help the region recover, the Company donated ¥30 million to the Japanese Red Cross Society and provided
supplies of the Nisshinbo Group’s household paper products and textile products.
Also, Group company Japan Radio donated ¥10 million to the Japanese Red Cross
Society.
The Group will continue to do what it can to help. We hope the region will be able torecover from the disaster as soon as possible.

President

Corporate Ethics Committee
Corporate attorneys toreceive reports

Corporate Ethics Committee
members to receive reports

Consultations, reporting

Stakeholders

Compliance Education
The Nisshinbo Group has created Japanese and English handbook versions of its Corporate
Vision of the Nisshinbo Group and uses the handbook as an educational tool for compliancerelated topics. We are making every effort to communicate this information to all employees,
including local executive staff in non-English-speaking countries as well. In the fiscal year
ended March 2011, we translated the Corporate Vision into local languages for textiles business employees working at Nisshinbo Do Brasil Industria Textil and PT. Naigai Shirts Indonesia
and used the handbook for compliance training.

Compliance

Topic

The Nisshinbo Group believes it is important for all employees to maintain the highest ethical

In July 2010, senior managers from each Group company met to actively discuss
compliance issues in order to reinforce the Nisshinbo Group’s administrative divisions.
Compliance is an increasingly important issue as Nisshinbo rapidly becomes a more international organization, and we plan to further enhance cooperation between administrative divisions to respond to this trend.

standards and, in keeping with the principle of “consistent integrity,” to act with fairness andintegrity toward our stakeholders in order to obtain society’s trust and understanding for ourbusiness. For that reason, we ask all employees to comply fully with the Nisshinbo Group’s
Corporate Code of Conduct.

Corporate Ethics Committee andCorporate Ethics Reporting System
Nisshinbo has established a Corporate Ethics Committee to oversee Group-wide
compliance activities. The committee answers directly to the president and is headed by amanaging officer.

32

33

Board of Directors (As of June 29, 2011)

FINANCIAL SECTION

Director,
Chairman

Director,*1
President

Director,*1
Vice President

Director,
Vice President

Director,
Executive Managing Officer

Takashi Iwashita

Shizuka Uzawa

Yoshihito Onda

Yorihisa Suwa

Masaaki Isobe

Director,
Executive Managing Officer

Director,
Managing Officer

Director,
Managing Officer

Director,
Managing Officer

Director,
Managing Officer

Masaya Kawata

Masahiro Murakami

Hiroshi Nakano

Nobuyuki Hagiwara

Koji Nishihara

Director*2

Director*2

Director*2

Tomofumi Akiyama

Toshiya Hanawa

Koji Kato

P36 Management’s Discussion and Analysis
P41 Six-Year Summary
P42 Consolidated Balance Sheets
P44 Consolidated Statements of Income
P45 Consolidated Statements of Comprehensive Income
P46 Consolidated Statements of Changes in Equity
P47 Consolidated Statements of Cash Flows
P48 Notes to Consolidated Financial Statements
P57 Independent Auditors’ Report*1 Representative director*2 Outside director

Managing Officers and Auditors (As of June 29, 2011)
President

Managing Officer

Shizuka Uzawa*

1

Vice President

Yoshihito Onda*1
Yorihisa Suwa*1
Executive Managing Officer

Masaaki Isobe*1
Masaya Kawata*1

Standing Statutory Auditor

Masahiro Murakami*
Hiroshi Nakano*1
Nobuyuki Hagiwara*1
Koji Nishihara*1
Toshihiro Kijima
Takayoshi Okugawa
Kazunori Baba

1

Yoshio Ide
Masao Satsuka
Statutory Auditor

Yo Kawakami*2
Toshihiko Tomita*2*1 Board member as well
*2 Outside auditor
34

35

FINANCIAL SECTION
350

MANAGEMENT’S DISCUSSION AND ANALYSIS

3(billions of yen)

300

2

250

2

200

previous year. Net income per share was ¥63.32 (US$0.74),

150
blackouts.
However, there was no damage resulting in long-compared with ¥10.38 in the previous year. Net sales and op-

100 disruption to the Group’s operations and all our businessterm• Japan Radio became a consolidated subsidiary through a friendly takeover aimed at strengthening andexpanding our electronics business. As a result, Nagano Japan Radio also became a consolidated subsidiary.

erating income were both record highs.

es50are now operating as normal. In our supply chain, supplies

The Great East Japan Earthquake damaged buildings andof 0raw materials and parts from suppliers based in the disaster-• Sales and operating income both hit record highs owing to the consolidation of these two companies in
the fourth quarter and a strong performance by all business segments except papers.

equipment at some of the Group’s business sites. Production

affected region are a concern, but we are working with ourwas temporarily suspended and operating schedules realigned

customers and suppliers to respond to the situation by sourc-

due to production adjustments at customers and rolling power

ing alternative products and taking other steps.

Net Sales

Operating Income

HIGHLIGHTS• Under Challenge 2012, our three-year management plan in effect through the fiscal year ending March
2013, we plan to rapidly realize synergies from the merger with Japan Radio and continue rolling out our
global strategy focused on Asia.

350(billions of yen)

300
250

OPERATING RESULTS
Overview

06

25

300

20

250

200

15

150

10

07

08

09

10

(billions of yen)(billions of yen)

200
150
100

Meanwhile, the automobile brakes and real estate busi-

100

continued to expand at a moderate pace supported by sus-

nesses both achieved sharp increases in sales and profits. In

50tained economic growth in Asian emerging economies andautomobile brakes, demand rose strongly in Japan through the0stimulus measures mainly in Europe and the US. The Japanese

second quarter owing to the government’s tax incentives andeconomy remained on a moderate recovery trend for most of

subsidies for eco-cars, and automobile production increased

the year thanks to government stimulus measures and rising ex-

to meet demand, mainly in Asian markets. In real estate, the

CURRENT BUSINESS STRATEGIES AND FUTURE PROSPECTS

ports, but the recovery stalled from the third quarter owing toredevelopment of the former Harisaki Plant site and the sale of

The Group is currently implementing Challenge 2012, a three-In the automobile brakes, textiles, and precision instru-

sharp yen appreciation, rising crude oil prices and a slowdown

subdivided lots for housing gained momentum.

07

08

09

10

11

1

11

During the fiscal year ended March 2011, the global economy

06

1

5

50

0

0

06

06
07

07
08

08
09

09
10

10
11

11

year management plan in effect through the fiscal year ending

ments businesses, the Group is rapidly establishing new bases

in exports. Also, the Great East Japan Earthquake that occurredMarch
2013. Under the plan, we are aiming to build
a com(billionsof yen)25

andexisting sites in Asia amid a shift in the global(yen)(billions of yen)
20 reinforcing
25

on March 11, 2011 caused considerable damage, disruption toeconomy from Europe and the US to China and other markets

distribution networks, and rolling power blackouts, resulting inResults of Operations in the Current Termand Comparison with the Previous Term

petitive operating base for the future by intensively investing
management resources in environment- and energy-related

in15Asia. We plan to further develop our global strategy cen-a sharp drop in production activity and consumer spending.

Net sales totaled ¥325,555 million (US$3,830 million), up

15
business
fields to nurture and strengthen new businesses such

15 as part of our efforts to achieve a radical structered on Asia

Against this backdrop, we made Japan Radio Co., Ltd.

34.3% from the previous year. The cost of goods sold was

as photovoltaic modules, fuel cells, electric double-layer capaci-tural change in our businesses and boost earnings potential.

a consolidated subsidiary through a friendly takeover to¥262,067 million (US$3,083 million), an increase of 30.0%

tors, Carbodilite, and carbon catalysts. We are also accelerating

strengthen and expand our electronics business segment. Na-

year on year. Selling, general and administrative expenses

the5 globalization of our operations, with a focus on Asia, andbution of a5 full year of results from Japan Radio and Nagano

gano Japan Radio Co., Ltd. also became a consolidated sub-came to ¥43,645 million (US$514 million), up 17.3% fromexecutingbusiness strategies that are aimed at finding optimal
0Japan
0 Radio
0 in the electronics business segment (they contrib-

sidiary. In addition, as part of the major restructuring of our

the previous year. As a result, operating income increased bylocations for production and sales in all areas of our business.

uted only fourth-quarter results in the fiscal year ended Marchbusinesses in this segment, we sold all our shares in equity-¥16,273 million from the previous fiscal year to ¥19,843 mil-method affiliate ALOKA Co., Ltd. (renamed Hitachi Aloka

lion (US$233 million).

20

10

06

07

08

09

10

11

20

10

10

5

We forecast a large increase in sales owing to the contri-

06

07
06

08
07

09
08

10
09

11
10

11

In the fiscal year ending March 2012, Japan Radio and Na-2011). We also forecast an increase in net income, owing togano Japan Radio, which we acquired through a tender offer,

the absence of loss on investment securities in affiliates soldIn addition, Nisshinbo reported ¥3,348 million in invest-

will contribute a full year of earnings to the Group’s consoli-

and retirement benefits paid due to restructuring of businessIn the textiles, automobile brakes, and precision instru-

ment income from the equity method, despite a large decrease

dated results in the electronics segment, which will become

operations booked in the fiscal year ended March 2011.

ments business segments, we aggressively expanded our over-due to the consolidation of Japan Radio Co., Ltd. and otherseas presence by setting up new subsidiaries and increasing

Nisshinbo’s
largest business segment. Japan Radio, a pioneer(yen)in20factors. This income mainly reflected a strong performance by

wireless communication devices, will be positioned as the core

for the impact of the Great East Japan Earthquake on theinvestment in existing subsidiaries.

auto parts affiliate Continental Automotive Corporation.

companyin the segment to reinforce and expand the business.
15

Group’s business from restrictions on power supplies, deterio-

Medical, Ltd. on April 1, 2011).

As a result, all our business segments except papers re-10

cal year. In electronics, this reflected the consolidation of Japanamortization of negative goodwill arising from the consolida-

Radio and Nagano Japan Radio from the fourth quarter andtion of Japan Radio Co., Ltd. Other expenses included ¥1,769

Textilesan improvement in earnings at New Japan Radio Co., Ltd. on

million for the difference between the book value of the net

the back of a recovery in demand for analog semiconductors.

0
Automobile
Brakesequity of investments in Japan Radio when it was an equity-

In textiles, earnings were strong at a Brazilian subsidiary andmethod affiliate and the fair value of the company when it

the benefits of business restructuring began to feed throughbecame a subsidiary, ¥1,469 million for loss on the sale of se-

into profit improvement. In precision instruments, sales of pho-curities, and ¥1,366 million for retirement benefits paid due totovoltaic module manufacturing equipment increased. As a

restructuring of business operations.

profit after losses in the previous fiscal year.

lion (US$132 million), an increase of ¥9,289 million from the

15

400
300

the amortization of goodwill, including a one-time gain on the

As a result, Nisshinbo posted net income of ¥11,185 mil-500

ration in the
10 economy, and other factors.

Nisshinbo also booked other income of ¥3,487 million for

ported higher sales and profits compared with the previous fis-

result, all three segments reported higher sales and a return tofactor in reasonable current assumptions(billions of yen)(billions of yen)
600 Our projections
20

5

Papers06

07

08

Net Sales (millions of yen)200

57,400 up 7.9%

100

46,119 up 12.4%
09

10

11

31,122 down 1.3%

05Operating Income (Loss) (millions of yen)0

184

an improvement of ¥2,404 million-55,090 up 31.2%
06
07
08
06
07

09
08

10
09

11
10

(131) a deterioration of ¥1,837 million

Precision Instruments

32,020 up 28.6%

1,414

Chemicals

7,284(295) an improvement of ¥218 million

up 15.5%

an improvement of ¥1,940 million

Electronics

112,820 up 118.2%

6,184

an improvement of ¥8,838 million

Real Estate

12,437 up 97.5%

10,191up 70.3%

Other Businesses

26,353 down 3.8%

408

down 40.2%

600

500

(billions of yen)

80

11

(yen)

60 14 to 26 for details on performance in individual segments.
Note: Changes in net sales and operating income (loss) are year-on-year figures; please refer to pages
400
36

300
200

40
20

37

0

06

07

08

09

10

0

11

06

07

08

09

10

11

FINANCIAL SECTIONDIVIDEND

Cash Dividends

Recognizing its responsibility to pay shareholders a stable divi-

20

dend, Nisshinbo Holdings Inc. paid a full-year dividend of ¥15.0
per share for the fiscal year ended March 2011. Nisshinbo will
(billionsof yen)350
maintainits basic policy of paying ¥15.0 per share whileworking

300distribute profits to shareholders by flexibly increasing divito
250 in response to changes in business conditions.
dends

15
300

10
5

200

(billions of yen)

50
FINANCIALPOSITION¥479,852 million (US$5,645 million), an increase of ¥121,742

20.6
4.7

06

07

08

09

10

11

200

400 Net assets at the end of the fiscal year totaled ¥211,557

of yen)in25notes and accounts receivable–trade, ¥33,235 (billions
millionin(billions of yen)25
million (US$2,489
million), an increase of ¥17,918 million frominventories, and ¥35,212 million in property, plant and equip-

the end of the previous fiscal year. This primarily reflected anment, while the main decrease in assets was ¥25,646 million

increase in retained earnings of ¥3,646 million, a decrease inin15investments in and advances to unconsolidated subsidiaries

15
net unrealized
gain on available-for-sale securities of ¥3,662

and
10 affiliates.

0
milliondue
declinesin the08fair valueof 10
securities
holdings,
10 to 06
07
09
11

10

11

150
80
60

300

20

100

5

As a result of the above, the shareholders’ equity ratio de06

07

08

09

10

10

11
300

115,758

136.6(billionsof yen)Other Businesses

250

80

—

Total

200

261,69445.0(billions of yen)

Notes: 1. Amounts are calculated based on manufacturing costs.
150
2. The real estate segment does not engage in manufacturing, and therefore the above amounts do not include any amounts from this segment.
3. The above amounts do not include consumption taxes.
100
(yen)
4. The sharp year-on-year increase in production results for the electronics segment mainly reflects the consolidation of Japan Radio Co., Ltd. and Nagano Japan Radio Co., Ltd.
from the fourth quarter.
50

06

07

08

09

10

CAPITAL EXPENDITURES

11

0

06

07

08

09

10

11

The Nisshinbo Group channels its capital expenditures into

manufacturing and R&D facilities at consolidated subsidiarypriority product fields that offer the potential for long-term

New Japan Radio Co., Ltd.

product
quality.
In thefiscal11
year under review, capital expendi08
09
10

07

of yen)tures amounted to ¥12,800 million (US$151(billions
million).
This main-

ly included ¥998 million in the textiles business, primarily for
additional textile production capacity at consolidated subsidiary

Capital Expenditures
25

15

10

automobile brakes business for investments such as additional

105(US$194 million), mainly reflecting income before income taxes

purchase of companies.

0

(yen)
and
20 minority interests of ¥20,536 million, depreciation and am-

20(billions of yen)friction material production capacity at Saeron Automotive Corporation and one of its subsidiaries. In addition, ¥3,420 million

5

was used in the electronics business, mainly for semiconductor

0

06

07

08

09

10

11

(billions of yen)

20

PT. Nikawa Textile Industry (Indonesia), and ¥937 million in thequired from newly consolidated subsidiaries, net of payment for

06

07

08

09

10

11

ortization of ¥13,158 million, and a decrease in operating cash

Cash Flows from Financing Activities

RISK INFORMATION

15 of ¥19,640 million owing to an increase in receivables.
flow

Cash flows from investing activities totaled ¥703 million (US$8

Forward-looking statements in this report are based on infor-

ards for asset impairment, there is a limited possibility that10
million), mainlyreflecting a decrease in short-term bank loans

mation available to the Nisshinbo Group as of March 31, 2011.

impairment losses will have an impact on net income, as the15

Cash Flows from Investing Activitiesof ¥4,106 5million and cash dividends paid of ¥2,672 million,Cash
5 flows from investing activities totaled ¥11,591 million

versus cash provided of ¥7,498 million from proceeds from the

06

07

08

09

10

11

acquisition cost of the investment securities was low. However,
20

0issuance of long-term debt.
-5

06

07

08

09

10

15

11

cash provided of ¥11,432 million from the sale of investment

As a result of the above, cash and cash equivalents at the end of

securities and investments in and advances to unconsolidated

the fiscal year totaled ¥45,563 million (US$536 million), an in-

10

crease of ¥27,795 million from the end of the previous fiscal year.

600

300

500

250

400

200

300

150

200

100

50

100

50

0

0

(billions of yen)(billions of yen)

06

07
06

5

EquityTotal Assets
350

08
07

09
08

10
09

11
10

11

300

0

0
80

(billions of yen)(yen)

Risks Associated with New Businesses(yen)comprehensive
income may fluctuate significantly(billions
owing
toof yen)20

The Nisshinbo Group is actively developing new businesseschanges in market value. Also, the Company plans to limit

such as electric double-layer capacitors and carbon catalysts inincreases in interest-bearing liabilities by selling investment se-order to expand sales and profits. However, uncertainties are

10
curitiesto procure capital needed for mergers and acquisitions,inherent in new businesses and the development of appealing

overseas business development, and capital investment, but

new products and the formation of new markets may not pro-misalignment of the timing between sale and investment may

ceed as anticipated. This could delay or prevent the recovery of

0 rise to unforeseen circumstances.
give

prior investments.
06

07

08

09

10

11

15

5

-5

06

07

08

09

Risks Associated with
the Utilization of Idle Land

10

11

60

Risk of Fluctuation in the Value ofInvestment Securities

40

Investment securities held by Nisshinbo are marked to market

steps to close certain business sites and subsequently use thein accordance with accounting standards for financial prod-idle land. Income from these redevelopment projects is provid-

ucts, and the Company implements impairment
accounting(billions of yen)ing
The
80 a significant contribution to the Company’s profits. (yen)

20
0
-10

600
500
06

07
06

08
07

09
08

10
09

11
10

11

400
300

38

Electronics

09

15

Cash flows from operating activities totaled ¥16,529 million

lion0 for the purchase of property, plant and equipment, versus

100

06
25
20

11

08

growth and into upgrading manufacturing equipment to raisesubsidiaries and affiliates and ¥12,504 million from cash ac-(US$136 million), primarily reflecting cash used of ¥10,391 mil-

150

0Cash Flows from Operating Activities

10

200

50

40

0
-10

and an increase of ¥18,482 million in minority interests.
clined 13.10percentage points year on year to 38.0%.

100

20

CASH FLOWS

250

07

250

¥27,795 million in cash and cash equivalents, ¥54,607 million

09

06
350
300

¥20,913
million in accrued severance benefits.
500

08

4.5

6,305

gano Japan Radio Co., Ltd. The main increases in assets were

0 the end of the previous fiscal year. This was mainly due
from

15.2

27,093
29,669mainly reflected the consolidation of Japan Radio and Na-

Total liabilities at the end of the fiscal year were ¥268,295

40,862PapersChemicals

trade, ¥21,523 million in the current portion of long-term

million (US$3,156 million), an increase of ¥103,824 million

Automobile Brakes
Precision Instruments

to increases0 of ¥29,93506million07in notes
and 09accounts
payable–
08
10
11

200

6.2

-5

(billions of yen)
600
long-term
debt, ¥10,931 million in deferred tax liabilities,
and20

Year-on-Year Change (%)

41,9270

debt, ¥3,000 million in commercial paper, ¥10,564 million in07

10

Amount (millions of yen)200

million from the end of the previous fiscal year. This increase

06

Industry Segment
Textiles50

0 assets at the end of the fiscal year under review stood at
Total
06
07
08
09
10
11

5

15

5

100

100

(billions of yen)

Production results in each segment for the fiscal year under review were as follows:

250

150

0

150

PRODUCTION RESULTS
20

(yen)

200
100

based on even stricter internal standards for a portion of thesesecurities. Based on current accounting standards and stand-To reform its business structures, Nisshinbo is taking active

redevelopment of this land may result in cleanup expenses and60
revisionsto laws could impede redevelopment work.
40
20

39

FINANCIAL SECTION

SIX-YEAR SUMMARY
Risks Associated with Product Quality

bally. The cancellation of contracts or requests to sharply reduce

The majority of the Nisshinbo Group manufactures products

prices owing to changes in the business results of such clientin accordance with international quality control standards, but

companies are factors outside the control of Nisshinbo, and con-there is no guarantee that quality-related problems will not oc-

sequently may have an impact on the Group’s financial results.

cur in the future. The Company has product liability insurance,

The Japan Radio Group has a relatively high ratio of busi-

but the occurrence of a large liability could have an adverse

ness with central and local governments, so sales tend to be

impact on the Group’s financial results.

concentrated toward the end of the fiscal year. In addition,(millions of yen)

350
300

trends in central and local government spending plans andRisks Associated with Market Shifts
Relating to Product Sale Prices and
Raw Material Procurement
Some of the Nisshinbo Group’s products can be significantly

capital expenditure in the telecommunications sector may af-

300(billions of yen)

2006

2007

250

2008

2009

2010

(billions of yen)

2011

250

Net Sales

278,617

312,825

322,412286,167

242,409

325,555

200

Operating Income

10,524

11,551

12,034408

3,570

19,843150

Net Income (Loss)

11,183

15,107

12,290(1,286)

1,896

11,185

200
150
100

100

Equity266,434

282,015

245,909

193,698

193,639

211,557

50

Total Assets

491,23050
472,670

424,706

366,858

358,110479,852

0

Shareholders’(%)
06
07Equity08Ratio 09

54.2

55.30

53.0
06

2.6

3.1

2.7

(0.3)

10

11

Return on Assets (%)

fect the Group’s financial results.

07

49.0
08

51.1
10

09

38.0

11

2.7

0.5

Return on Equity (%)

4.6

5.7

5.1

(0.6)

1.0

6.1

Payout Ratio (%)*

32.2

35.6

—

—

167.7

27.5

Risks Associated with Overseas
Business Development

Capital Expenditures

16,54818,30624,28016,872

13,027

12,800velopments and competition with other companies. Sales prices

The Nisshinbo Group owns many production bases overseas.

Depreciation and Amortization

13,835

14,984

16,89018,025

12,96013,158for textile and paper products and raw materials procured by

Risks inherent to this international presence include unforeseen

the Group such as cotton, pulp, steel, and other materials arechanges in laws and regulations, unfavorable political or eco-particularly susceptible to these market trends.

nomic factors, and social turmoil.

affected by fluctuations in market prices owing to market de-

The New Japan Radio Group (New Japan Radio Co., Ltd.
and its consolidated subsidiaries) generates more than 80%

350(billions of yen)

300
250

25

300

20

250

200

15

150

10

of its consolidated sales from semiconductor devices. Signifi-

Risks Associated with
100 Financial Covenants
Related to Capital Procurement

cant fluctuations in demand in the semiconductor market may

The Company and its consolidated subsidiaries Japan Radio,

therefore have a large impact on the Nisshinbo Group’s finan-

08
09
New Japan Radio, and Nagano Japan06
Radio 07
have enteredintocial results.

commitment line contracts with multiple financial institutions.

50
0

10

11

Risk Associated with Fluctuations
in Exchange Rates
The Nisshinbo Group imports raw materials such as cotton andGroup’s financial results.

pulp. An inability to reflect changes in exchange rates in product prices may put pressure on profits.
The Japan Radio Group (Japan Radio Co., Ltd. and its con-

15

150

Per Share (in yen):

10

100

Net Income (Loss)

53.21

74.19

63.34

(7.08)

10.38

63.32
1,036.80

1,283.21

1,301.14

1,179.43

985.191,034.04

00
Cash
Dividends
06
06
07

1110.00

15.000

15.00
06

15.00
08

15.00
10

12,602

12,744

13,253

07
08

08
09

09
10

10
11

Number of Employees

5

07

09

12,72611

15.00

18,292

12,488*Payout Ratio is on a non-consolidated basis.

for borrowing may change due to future fluctuations in the25(billions of yen)

20
Risks Associated with
Supply Chain

20
15

The Group may face difficulties
in securing necessary com15
ponents owing to changes in the economic environment. For

10

10example, rapid developmentsin specific parts supply regions

may therefore affect the Nisshinbo Group’s financial results, withand product fields may affectsupply capacity at parts compa55phases of yen appreciation putting pressure on profits.

nies and lead to delivery delays. This in turn could impact the0

06
07 in margins
08
09
Group’s shipment plans or lead to deteriorationow-

Risk Associated with Unforeseen
Revisions to Laws and Regulations

ing to sharp increases in the price of components.

Products supplied by the Japan Radio Group are subject to arange of laws and regulations governing areas such as national

Risks Associated with Disasters
and Accidents

security. These laws include export restrictions, import regula-

The Nisshinbo Group takes steps to manage risk related totions, and environmental and recycling laws. The Japan Radiodisasters and accidents. However, a large earthquake or otherGroup has established clear internal regulations regarding

10

0

11

25

(yen)
(billions of yen)

20 SalesNet(billions of yen)

200
5
150
0
100 06

0
07
06

08
07

09
08

10
09

11
10

-5

11

20

major disaster or a sudden accident such as a fire may cause

500

15

compliance with these laws. However, unforeseen revisions tosignificant damage to the Group’s manufacturing facilities,

400

laws and regulations may limit the Group’s business activities

leading to the suspension
10 of production activities that causes

25
10

300

and lead to an increase in costs.

shipment delays. The Group may also incur considerable costs

200

15

5 or facilities.
to restore damaged buildings

In addition, the outbreak and spread of a new infectious
09

06

07

08

09

10

10

11

15
0

0

10
-5

The customers of the Nisshinbo Group’s automobile brakes busi-

5

ness are automobile manufacturers that conduct business glo-

0(billions of yen)

250
200
150
100

06

07

08

09

10

11

06

07

08

09

10

11

Net Income (Loss) per Share(billions of yen)(billions of yen)

80

(yen)

60
(billions of yen)

40

20
5

100

300

0

11

Net Income (Loss)(yen)(billions of yen)

50

50

20

0

10
5

0

disease may have an impact on the Group’s
operations.
06
07
08

20
15

350
15
300
10
250

600

Risks Associated with Changes inCustomer Business Performance(billions of yen)

20 198,698,939 184,098,939 184,098,939 178,798,939
208,198,939 201,698,939

Common Shares Issued

200

50
Shareholders’ Equity

have high ratios of overseas sales. Fluctuations in exchange rates

solidated subsidiaries) and the New Japan Radio Group both25

5Since certain financial covenants and acceleration clauses
are attached to these contracts, it is possible that the terms(billions of yen)(billions of yen)

25

(billions of yen)

20
20

06

07
06

08
07

09
08

10
09

11
10

11

06

07

08

09

10

11

0
-10

15
10
5
0

40

06

07

06

08

07

09

08

10

09

11

10

11
41

600

(billions of yen)

80

(yen)

FINANCIAL SECTIONCONSOLIDATED BALANCE SHEETS(March 31, 2011 and 2010)ASSETS

2011(millions of yen)(thousands of
US dollars) (Note 1)

2010

2011

Current assets:
Cash and cash equivalents
Time deposits (Note 5)
Marketable securities (Note 4)(millions of yen)(thousands of
US dollars) (Note 1)

2011

2010

2011

Short-term bank loans (Note 5)¥25,494¥24,340$299,929

LIABILITIES AND EQUITYCurrent liabilities:¥45,563¥17,768$536,035

1,313

2,413

15,447

Commercial paper

25,00022,000294,118

160

2

1,883

Current portion of long-term debt (Note 5)

23,854

2,331

280,635

Notes and accounts payable, trade (Note 5)

54,77024,835644,353

Unconsolidated subsidiaries and affiliates

278

760

3,271

PayablesReceivables
Notes receivable, trade13,1297,449

154,459

Accounts receivable, trade (Note 5)

97,91848,991

1,151,977

Unconsolidated subsidiaries and affiliates

1,589

5,819

18,694

Other

3,123

1,264

36,741

115,759

63,523

1,361,871

7,699

7,822

90,57662,74733,417738,200

Accrued expenses

8,790

5,740

103,412

Accrued income taxes

1,662

3,137

19,553

Other

(478)

(300)

(5,624)

Deferred tax liabilities (Note 7)

54

44

635

115,281

63,223

1,356,247

Other current liabilities (Note 5)

9,284

3,358

109,224

Inventories (Notes 3 and 5)

74,52841,293876,800

Total current liabilities

156,885

94,367

1,845,706

Deferred tax assets (Note 7)

3,057

3,982

35,965

Other current assets

1,775

1,925

20,882

241,677

130,606

2,843,259

Long-term debt (Note 5)24,98814,424

293,976

Accrued severance benefits (Note 6)

41,783

20,870491,565

Deferred tax liabilities (Note 7)

26,835

15,914

315,706

Other long-term liabilities (Note 5)

17,80418,896

209,459

111,410

70,104

1,310,706

2011—178,798,939 shares

27,588—324,565

2010—184,098,939 shares—

27,588—20,401

20,401240,012

203

156

2,388

Retained earnings

133,230

129,584

1,567,412

Net unrealized gain on available-for-sale securities

13,43017,092

158,000

Less allowance for doubtful accounts

Total current assets

Property, plant and equipment (Note 5):Land56,194

27,643

661,106

Buildings and structures

160,834

127,477

1,892,165

Machinery, equipment and tools

254,941

234,0032,999,306

2,247

1,550

26,435474,216

390,673

5,579,012(324,278)(275,947)(3,815,035)

149,938

114,726

1,763,977

Construction in progress
Less accumulated depreciation

Long-term liabilities:

Commitments and contingencies (Note 11)
Equity (Note 12):
Common stock:
Authorized—371,755,000 shares
IssuedCapital surplus
Stock acquisition rights

Deferred loss on derivatives under hedge accounting
Investments and other assets:

Foreign currency translation adjustments

Investment securities (Notes 4 and 5)

57,90960,471

681,282

Investments in and advances to unconsolidated subsidiaries and affiliates

13,972

39,618164,376

2011—2,892,315 shares

Deferred tax assets (Note 7)

5,237

4,596

61,612

2010—7,137,858 shares

Goodwill

1,225

616

14,412

Other

9,894

7,477

116,400

(76)

(82)

(894)

(9,601)(5,538)(112,953)(2,591)—(30,482)

Less shares in treasury

Minority interests—(6,053)—

182,584

183,148

2,148,048

28,973

10,491

340,858

88,237112,778

1,038,082

211,557

193,6392,488,906¥479,852¥358,110$5,645,318¥479,852¥358,110$5,645,318

See Notes to Consolidated Financial Statements.

42

43

FINANCIAL SECTION

Consolidated Statements of Income

Consolidated Statements of comprehensive income(Years ended March 31, 2011 and 2010)(Years ended March 31, 2011)(millions of yen)

Net sales(thousands of
US dollars) (Note 1)

2011

2010

2011

¥325,555¥242,409$3,830,059(millions of yen)

Income before minority interests(thousands of
US dollars) (Note 1)

2011

2010

2011

¥13,443—$158,153(3,570)—(42,000)

7—82(4,374)—(51,458)

Other comprehensive income:Costs and expenses:

Net unrealized loss on available-for-sale securities

Cost of sales

262,067

201,625

3,083,141

Selling, general and administrative expenses

43,64537,214513,471

305,712238,8393,596,612

Operating income

Equity in loss of affiliates

(145)

—

(1,706)(8,082)—(95,082)¥5,361—$63,071

3,570

233,447

1,757

2,144

20,671

Parent¥3,467—$40,788

Minority interest¥1,894—$22,283

Comprehensive income
Comprehensive income:Interest expenses

(832)

(816)

(9,788)Equity in earnings of affiliates

3,348

3,887

39,388Other, net (Note 10)(3,580)(3,449)(42,118)

693

1,766

8,153

20,536

5,336

241,600

Current

2,430

3,238

28,588Deferred

4,663

4,042

54,859

7,093

7,280

83,447

13,443(1,944)

158,153

Income before income taxes and minority interests

Foreign currency translation adjustments

19,843

Other income (expenses):
Interest and dividend income

Deferred loss on derivatives under hedge accounting

All items of comprehensive income are required to be recognized under ASBJ statement No.25 as components of comprehensive income and reported in aconsolidated financial statement, effective for fiscal years beginning on or after April 1, 2010.
See Notes to Consolidated Financial Statements.

Income taxes (Note 7):

Income (loss) before minority interests
Minority interests in net income

2,258(3,840)26,565¥11,185¥1,896$131,588(yen)(US dollars)

Net income¥63.32¥10.38$0.74

Cash dividends

15.00

15.00

0.18

Net income

Per share:

See Notes to Consolidated Financial Statements.

44

45

FINANCIAL SECTION

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows(Years ended March 31, 2011 and 2010)(Years ended March 31, 2011 and 2010)2011
Common stock:
Balance at beginning of year
(2011 and 2010—184,098,939 shares)
Balance at end of year
(2011—178,798,939 shares and 2010—184,098,939 shares)(thousands of
US dollars) (Note 1)

2010

2011

¥27,588¥27,588$324,565¥27,588¥27,588$324,565

Capital surplus:
Balance at beginning of year
Balance at end of year

¥20,401¥20,401¥20,401¥20,401$240,012$240,012

Stock acquisition rights:
Balance at beginning of year
Net changes
Balance at end of year

¥156
47
¥203

¥107
49
¥156

$1,835553$2,388Retained earnings:
Balance at beginning of year
Net income
Cash dividends
Adjustment due to increase in consolidated subsidiaries
Retirement of treasury stock
Other
Balance at end of year

¥ 129,584
11,185(2,672)558(5,422)(3)¥ 133,230¥ 130,521
1,896(2,755)
(68)
(1)
(9)
¥ 129,584$1,524,517
131,588(31,435)
6,565(63,788)(35)$1,567,412

Net unrealized gain on available-for-sale securities:
Balance at beginning of year
Net changes
Balance at end of year

¥17,092(3,662)¥13,430¥10,555
6,537¥17,092$201,082(43,082)$158,000

¥(82)
6
¥(76)

¥(42)
(40)
¥(82)

$(965)
71$(894)

Foreign currency translation adjustments:
Balance at beginning of year
Net changes
Balance at end of year¥(5,538)(4,063)¥(9,601)¥ (8,168)
2,630¥(5,538)$(65,153)(47,800)$(112,953)

Treasury stock at cost:
Balance at beginning of year
Add: acquired
Add: increase in the consolidated subsidiaries
Add: increase in the affiliate accounted for by the equity method
Deduct: sold and retirement
Balance at end of year¥(6,053)(30)(1,931)—
5,423¥(2,591)¥(1,018)(5,037)—(5)
7¥(6,053)$(71,212)(353)(22,717)—63,800$(30,482)

Deferred loss on derivatives under hedge accounting:
Balance at beginning of year
Net changes
Balance at end of year

Minority interests:
Balance at beginning of year
Net changes
Balance at end of year
See Notes to Consolidated Financial Statements.
46(millions of yen)

¥10,491
18,482¥28,973¥13,754(3,263)¥10,491$123,423
217,435$340,858

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile net income to net cash provided by operating activities:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Equity in earnings of affiliates
Reversal of doubtful receivables
Provision for accrued pension and severance benefits
Payment of accrued pension and severance benefits
Loss on sale of property, plant and equipment
Impairment of long-lived assets
Loss (Gain) on sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Loss on write-down of investments in and advances to unconsolidated
subsidiaries and affiliates
Loss on plant closures
Loss due to increase in the Company’s share of the affiliate accounted forby the equity method
Other
Changes in operating assets and liabilities:
Receivables
Inventories
PayablesOther, net
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Payment for purchase of property, plant and equipment
Payment for purchase of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Decrease in time deposits
Cash acquired from newly consolidated subsidiaries, net of payment forpurchase of companies
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Repayment of long-term debt
Decrease in short-term bank loans
Increase in commercial paper
Cash dividends paid
Payment for purchase of treasury stock
Proceeds from treasury stock soldDecrease in other long-term liabilities
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents of newly consolidated subsidiaries
at beginning of year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(millions of yen)(thousands of
US dollars) (Note 1)

2011

2010

2011

¥20,536¥5,336$241,600(5,960)13,158(3,130)(3,348)(44)
4,007(4,096)
336
1,015

(30)
12,960(242)(3,887)(175)
3,439(2,738)623
2,354(70,118)
154,800(36,824)(39,388)(518)
47,141(48,188)
3,953
11,941

1,469

(543)

17,283

124
331

557
435

1,459
3,894

1,769
1,189

—
(127)

20,812
13,988(19,640)
9,397
2,086
(2,670)16,529

229
7,334
4,050
(2,037)
27,538(231,059)
110,553
24,541(31,412)
194,458

419

290

4,930

11,432(10,391)

3,339(13,250)

134,494(122,247)(2,265)(1,149)(26,647)

1,524

904

17,92912,504(1,632)
11,591—(83)(9,949)147,106(19,200)
136,365

7,498(3,014)(4,106)3,000(2,672)
(30)
829
(703)
(99)
703

12,666(3,065)(35,883)
4,000(2,755)(5,037)—(569)
296(30,347)

88,212(35,459)(48,306)
35,294(31,435)
(353)
9,753
(8,271)(1,164)
8,271(1,034)27,7891,299(11,459)(12,165)
326,929

6
17,768¥45,563

24
29,203¥17,768

71
209,035$536,035

See Notes to Consolidated Financial Statements.
47

FINANCIAL SECTION

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan, which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
In addition, the accompanying footnotes include information which is not required under generally accepted accounting

principles and practices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are
given solely for convenience and are stated, as a matter of­arithmetical computation only, at the rate of ¥85=$1, the approximate exchange rate at March 31, 2011. The translations
should not be construed as representations that the Japanese
yen amounts have been, could have been, or could in the future be, converted into United States dollars.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts ofNisshinbo Holdings, Inc. (hereinafter the “Company”) and its
significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies inwhich the Parent, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant
influence are accounted for by the equity method.
Investments in unconsolidated subsidiaries and associatedcompanies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries
and associated companies are stated at cost. If the equity
method of accounting had been applied to the investments inthese companies, the effect on the accompanying consolidated
financial statements would not be material.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis eliminated.

(b) Foreign currency transactions
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into
Japanese yen at the exchange rates at the balance sheet date.
The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are nothedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries
and affiliates in foreign currencies are translated at the historical rates effective at the dates of transaction from which suchaccounts were originated.

foreign subsidiaries are translated into yen at the average exchange rate.

(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
placed with banks on demand and highly liquid investmentswith insignificant risk of changes in value which have maturities
of six months or less when purchased.

(e) Inventories
Inventories are measured principally at the lower of cost and
net realizable value, cost being substantially determined by theaverage cost method.

(f) Marketable securities and otherinvestments
The Group classifies all of its marketable securities as availablefor-sale which are reported at fair value, with unrealized gains
and losses included in equity as net unrealized gain on available-for-sale securities. Other investments without quoted
market prices are stated at cost. Realized gains or losses on thesale of securities are based on the average cost of a particular
security held at the time of sale.
Marketable securities and other investment securities are
regularly reviewed for other-than-temporary declines in carrying amount based on criteria that include the length of time
and the extent to which the market value has been less thancost, the financial condition and near-term prospects of the issuer and the Company’s intent and ability to retain marketablesecurities and investment securities for a period of time sufficient to allow for any anticipated recovery in market value.
When such a decline exists, the Company recognizes an impairment loss to the extent of such decline.

(c) Foreign currency financial statements
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate. Revenue and expense accounts of consolidated

48(g) Property, plant and equipment
Effective April 1, 2009, the Group adopted the straight-line
method of depreciation, which had been previously

depreciated principally by the declining balance method. Thischange was made to provide a more accurate allocation of depreciation. The effects of this change were to decrease depreciation by ¥3,789 million and to increase income before income
taxes and minority interests by ¥3,518 million for the year ended
March 31, 2010.

payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value if theycannot reliably estimate fair value.

(l) Research and development costs
Research and development costs are charged to income as
incurred.

(h) Goodwill
The difference between the cost and underlying fair value ofthe net equity of investments in subsidiaries at acquisition is
included in goodwill or other long-term liabilities and amortized on a straight-line basis over five years.
Effective April 1, 2010, the Company changed its accounting method for excess of fair value of acquired net assets overcost to be recognized as other income.

(i) Impairment of long-lived assets
Long-lived assets are evaluated for impairment using an estimate of undiscounted cash flows whenever events or changes
in circumstances indicate that the carrying amount of such
asset may not be recoverable. If the estimate of undiscounted
cash flow is less than the carrying amount of the asset, an impairment loss is recorded based on the fair value of the asset.
Fair value is determined primarily by using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
For assets held for sale, an impairment loss is further increased
by costs to sell. Long-lived assets to be disposed of other thanby sale are considered held and used until disposed of.

(j) Retirement and pension plans
The Group has defined benefit plans and defined contributionplans that cover substantially all employees. Under the defined
benefit plans for the Group, the annual provision for retirement
benefits is calculated to state the liability for retirement benefits based on the projected benefit obligations and plan assets
at the balance sheet date.
Retirement benefits to directors and corporate auditors areprovided at the amount that would be required if all directors
and corporate auditors retired at the balance sheet date.

(k) Stock options
The accounting standard for stock options requires companies
to recognize compensation expense for employee stock options based on the fair value at the date of grant and over thevesting period as consideration for receiving goods or services.
The standard also requires companies to account for stock options granted to non-employees based on the fair value of either the stock option or the goods or services received. In thebalance sheet, the stock option is presented as a stock acquisition right as a separate component of equity until exercised.
The standard covers equity-settled, share-based paymenttransactions, but does not cover cash-settled, share-based(m) Income taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to
the temporary differences.

(n) Derivative financial instruments
The Group uses a variety of derivative financial instruments,
including foreign currency forward contracts, currency swaps,
coupon swaps, currency options and interest rate swaps, as ameans of hedging exposure to foreign currency and interest
rate risks. The Group does not enter into derivatives for tradingor speculative purposes.
The foreign currency forward contracts, coupon swaps andcurrency options are utilized to hedge foreign currency exposures in sales of finished products to overseas customers andprocurement of raw materials from overseas suppliers. Trade
receivables and payables denominated in foreign currencies aretranslated at the contracted rates if the contracts qualify forhedge accounting.
Interest rate swaps are utilized to hedge the interest rate
exposures of long-term debt.

(o) Asset retirement obligations
Effective April 1, 2010, the Group adopted “Accounting Standard for Asset Retirement Obligations” (Accounting Standards
Board of Japan Statement No.18 March 31, 2008) and “Implementation Guidance for Accounting Standard for Asset Retirement Obligations” (Accounting Standards Board of Japan
Implementation Guidance No.21 March 31, 2008).
The effects of this change were to decrease operating income by ¥24 million ($282 thousand) and to decrease income
before income taxes and minority interests by ¥268 million($3,153 thousand).

(p) Accounting for business combinations
Effective April 1 2010, the Group adopted “Accounting Standard for Business Combinations” (Accounting Standards Boardof Japan Statement No.21 December 26, 2008) and related
statements issued by Accounting Standards Board of Japan.

49

FINANCIAL SECTION

3. Inventories

Annual maturities of long-term debt were as follows:

Inventories at March 31, 2011 and 2010 were as follows:(thousands of US dollars)Year ending March 31,(millions of yen)(thousands of US dollars)

2012¥23,854$280,635

2011

2010

2011

2013

12,798150,565

Finished products¥24,510¥18,100$288,353

2014

4,217

49,611Work in process

34,732

14,275

408,612

2015

5,066

59,6002016 and thereafter

Materials and supplies

15,286

8,918

179,835¥74,528¥41,293$876,800

The carrying amounts and aggregate fair values of securities available-for-sale included in marketable and investment securities at
March 31, 2011 and 2010 were as follows:(millions of yen)(thousands of US dollars)

2011

2010

2011

Cost

¥31,667¥27,683$372,553

Unrealized gains

27,543

31,236

324,035

Unrealized losses(3,474)(790)(40,870)¥55,736¥58,129$655,718

Fair value

Aggregate cost of non-marketable securities accounted for under the cost method totaled ¥2,333 million ($27,447 thousand) and¥2,344 million at March 31, 2011 and 2010, respectively.

(millions of yen)

2011

2010

2011

¥9,931¥10,137$116,835

Property, plant and equipment

15,376

10,056

180,894

Notes and accounts receivable, trade

4,052

4,494

47,671

Investment securities(millions of yen)(thousands of US dollars)

2011

2010

2011

¥17,715¥13,183$208,412

Investment securities
Time deposits

2,712

5,318

¥27,399$350,718(millions of yen)(thousands of US dollars)

2011

2010

2011

¥7,965¥8,292$93,706

369

441

4,341

30,4203,306

357,882

707

266

8,317

48,842

16,755

574,611(23,854)(2,331)(280,635)¥24,988¥14,424$293,976

1

209

12

¥8,335¥8,942$98,059(millions of yen)(thousands of US dollars)

2011

2010

2011

¥8,596¥9,396$101,130

Notes and accounts payable, trade

292

264

3,435

Other current liabilities

564

179

6,635

¥9,452¥9,839$111,200

Liabilities with collateral:
Other long-term liabilities

Long-term debt without collateral:

Less current portion

452¥29,811At March 31, 2011 and 2010, in addition, pledged assets as collateral for liabilities other than the above were as follows:

Long-term debt with collateral:

Capital lease obligations, due through 2016

(thousands of US dollars)

Inventories

Property, plant and equipment

The annual interest rates applicable to the short-term bank loans at March 31, 2011 and 2010 were 0.5% to 6.8%. Long-term debt
at March 31, 2011 and 2010 consisted of the following:

Loans from banks maturing serially to 2016, ranging from 0.6% to 3.7%

34,200$574,611

Assets pledged:

5. Short-Term Bank Loans and Long-Term Debt

Loans from banks maturing serially to 2025, ranging from 0.8% to 2.6%

2,907
¥48,842

At March 31, 2011 and 2010, net book value of assets pledged as collateral for short-term bank loans and long-term debt wereas follows:

4.	Marketable and Investment Securities

50(millions of yen)

51

FINANCIAL SECTION

6.	Retirement and Pension Plans
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined basedon the rate of pay at termination, years of service and certain
other factors.
The Group provides defined benefit plans and defined contribution plans. In addition, the Company has established an

7. Income Taxes
employee retirement benefit trust.
The liability for retirement benefits for directors and corporate auditors at March 31, 2011 and 2010 were ¥303 million($3,565 thousand) and ¥153 million. The retirement benefits
for directors and corporate auditors are paid subject to the approval of the shareholders.

The liability for employees’ retirement benefits at March 31, 2011 and 2010 consisted of the following:(millions of yen)(thousands of US dollars)

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2011 and 2010 were as follows:(millions of yen)(thousands of US dollars)

2011

2010

2011

Loss on devaluation of inventories¥2,837¥511$33,376

Tax loss carryforwards

14,992

17,569176,376923

166

10,859Accrued employees’ bonuses

2,386

1,151

28,071

Accrued severance benefits

15,861

7,777

186,600

855

1,050

10,0593,462

410

40,729Deferred tax assets:

Allowance for doubtful accounts

2011

2010

2011

Projected benefit obligation¥89,753¥45,359$1,055,918

Fair value of plan assets(44,648)(19,662)(525,271)

Impairment of long-lived assets and depreciation in excess of tax limitation

45,10525,697

530,647

Devaluation of investment securities

1,777

2,009

20,906

Software costs

2,817

—

33,141

Other

4,754

3,294

55,930(37,382)(17,826)(439,788)¥11,505¥14,102$135,353¥(10,613)¥(12,377)$(124,859)

Deferred gains on sale of property(4,377)(4,396)(51,494)

Land revaluation surplus(12,583)(2,550)(148,035)

Unrecognized prior service cost
Unrecognized actuarial loss

(9,040)(9,102)(106,353)

—

(39)

—

37,842

18,565445,200

3,638

2,152

42,800¥41,480¥20,717$488,000

Unrecognized transitional obligation
Prepaid pension costLess valuation allowance

Deferred tax liabilities:
Unrealized gain on available-for-sale securities

The components of net periodic retirement benefit costs for the years ended March 31, 2011 and 2010 were as follows:(millions of yen)(thousands of US dollars)

2011

2010

2011

Service cost

¥2,668¥2,098$31,388

Other(2,527)(2,159)(29,729)¥(30,100)¥(21,482)$(354,117)¥(18,595)¥(7,380)$(218,764)

Defined benefits plans:Interest cost

1,105

883

13,000

Expected return on plan assets

(424)

(456)

(4,988)

Amortization of prior service cost

(228)

(243)

(2,682)

Recognized actuarial loss

850

1,083

10,000

40

48

470

4,011

3,413

47,188

Amortization of transitional obligation
Net periodic benefit costs
Defined contribution plan:
Defined contribution pension cost
Total

474

429

5,577

¥4,485¥3,842$52,765

Retirement benefits paid due to restructuring of business operations for the years ended March 31, 2011 and 2010 were ¥1,366 million ($16,071 thousand) and ¥797 million, respectively.
Assumptions used for the years ended March 31, 2011 and 2010 were set forth as follows:

2011

2010

2.0%

2.0%

Expected rate of return on plan assets

0.0%–2.9%

2.0%–2.8%

Amortization period of prior service cost

10–15 years

10–15 years

Recognition period of actuarial gain / loss

10–15 years

10–15 years

10 years

10 years

Discount rate

Amortization period of transitional obligation52

Net deferred tax

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2011 and 2010 and the actual effective
tax rates reflected in the accompanying consolidated statements of income was as follows:

2011

2010

40.7%

40.7%

Net changes in valuation allowance

(4.9)

175.0

Equity in earnings of affiliates(6.6)(29.7)—(61.7)

Normal effective statutory tax rate

Devaluation of investment in subsidiary allowed

8.2

22.8

Cash dividends and other permanent differences(12.9)(19.2)

Lower income tax rates applicable to income in certain foreign countries

(1.8)

(4.6)

Amortization of goodwill

(5.7)

(0.1)

Loss on investment securities in affiliates sold

11.3

—

Other

6.2

13.3

34.5%

136.5%

Intercompany dividends

Actual effective tax rate

53

FINANCIAL SECTION

8. Leases

10. Other Income (Expenses) — Other, Net

The Group leases certain machinery, computer equipment andother assets.
Total rental expenses for the years ended March 31, 2011
and 2010 were ¥408 million ($4,800 thousand) and ¥423 million, respectively, including ¥254 million ($2,988 thousand)and ¥256 million of lease payments under finance leases.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, accumulated impairment
loss, obligation under finance leases, and depreciation expenseof finance leases that do not transfer ownership of the leased
property to the lessee on an “as if capitalized” basis for theyears ended March 31, 2011 and 2010 was as follows:(millions of yen)

Acquisition cost
Accumulated depreciation(thousands of US dollars)(millions of yen)(thousands of US dollars)

2011

2010

2011

Loss on sale of property, plant and equipment¥(336)¥(623)$(3,953)

Impairment of long-lived assets(1,015)(2,354)(11,941)

Gain (loss) on sale of securities(1,469)543(17,283)

(124)

(557)

(1,459)

Write-down of investment securities

2011

2010

2011

¥2,036¥1,185$23,953

Loss on plant closures

(331)

(435)

(3,894)Retirement benefits paid due to restructuring of business operations(1,366)(797)(16,071)

Amortization of goodwill

3,487

569

41,024

Loss due to increase in the Company’s share of the affiliate accounted forby the equity method(1,769)—(20,812)(1,635)(906)(19,235)

(15)

—

(177)

Accumulated impairment loss

¥386

¥279

$4,541(millions of yen)(thousands of US dollars)

2011

2010

2011

Due within one year

¥248

¥151

$2,918Due after one year

138

128

1,623

¥386

¥279

$4,541

Net leased property

Other income (expenses) — Other, net consisted of the following:

Other, net

(657)

205

(7,729)¥(3,580)¥(3,449)$(42,118)

Obligations under finance leases:

Total(millions of yen)(thousands of US dollars)

2011

2010

2011

¥251

¥256

$2,953

Commitments for capital expenditures outstanding at March 31, 2011 and 2010 were in the approximate amounts of ¥2,155 million($25,353 thousand) and ¥2,505 million, respectively.

12. Subsequent Events

Depreciation expense under finance leases:
Depreciation expense

Depreciation expense, which is not reflected in the accompanying statements of income, is computed by the straight-line method.

9. Derivatives
The Group enters into foreign currency forward contracts andcurrency swap contracts to hedge exchange risk associatedwith certain assets and ­liabilities denominated in foreign currencies. Foreign currency forward contracts which qualify forhedge accounting for the years ended March 31, 2011 and2010 and such amounts which are assigned to the associatedassets and liabilities are recorded on the balance sheets at
March 31, 2011 and 2010, are excluded from disclosure of market value information.
The Group also enters into interest rate swap contracts tomanage its interest rate exposures on certain liabilities. Such contracts outstanding at March 31, 2011 and 2010 were as follows:(millions of yen)

2011(a) Year-end cash dividends(c) Stock option

On May 11, 2011, the Board of Directors of Nisshinbo Holdings
Inc. declared year-end cash dividends (¥7.5 per share) in theamounts of ¥1,335 million ($15,706 thousand).

At the general shareholders meeting held on June 29, 2011, theCompany’s shareholders approved a stock option plan to grant
stock purchase rights up to 200 thousand shares of the Company’s common stock to directors and key employees in the
period from August 1, 2013 to July 31, 2018.

(b) Purchase of treasury stock
On May 31, 2011, the Board of Directors of Nisshinbo Holdings
Inc. approved the Company to purchase treasury stock 3,370
thousand shares of the Company’s common stock from a consolidated subsidiary.
On June 1, 2011, the Company purchased 3,370 thousand
shares of treasury stock of the Company’s common stock.

(thousands of US dollars)

2011

2010

Contract
amountFair value

Unrealized
gain (loss)

Contract
amountFair value

Unrealized
gain (loss)

Contract
amountFair value

Unrealized
gain (loss)

¥407

¥(18)

¥(18)

¥184

¥(9)

¥(9)

$4,788$(212)$(212)¥1,667¥(24)¥(24) ¥1,735

¥280

¥3

Receive EUR · Pay JP¥¥2,629Receive EUR · Pay US$¥559

Not hedged:

11. Commitments and Contingencies

Interest rate swaps:
Fixed rate payments, floating rate receipt
Foreign currency forward contracts:
Sold
Purchased¥(65)¥(65) $19,612$(282)$(282)

¥390

¥21

¥21

$3,294$35$35¥(350)¥(350) ¥3,405

¥431

¥431

$30,929 $(4,118) $(4,118)¥(10)¥(10) ¥1,044

¥(28)

¥(28)

$6,576¥3

Currency swap:

54$(118)$(118)
55

FINANCIAL SECTION

INDEpENDENT AuDITOrS’ rEpOrT
13. Segment Information
Information about industry segments of the Company and its consolidated subsidiaries for the years ended March 31, 2011 and 2010
was as follows:(millions of yen)

2011
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate

Consolidated

I. Sales and Operating Income (loss)

To the Board of Directors of Nisshinbo Holdings Inc.

We have audited the consolidated balance sheets of Nisshinbo Holdings Inc. and consolidated subsidiaries
as of March 31, 2011 and 2010, and the related consolidated statements of income, consolidated
statements of comprehensive income, changes in equity, and cash flows for the year then ended, allSales to customers¥57,400¥46,119¥31,122¥32,020¥7,284¥112,820¥12,437¥26,353¥—¥ 325,555

Intersegment sales

23

346

176

701

533

149

3,477

1,085

(6,490)—expressed in Japanese yen. These consolidated financial statements are the responsibility of the57,423

46,46531,29832,721

7,817

112,969

15,91427,438(6,490)325,555

57,23941,37531,42931,3078,112

106,785

5,723

27,030(3,288)305,712Company’s management. Our responsibility is to express an opinion on these consolidated financial¥184¥5,090¥(131)¥1,414¥(295)¥6,184¥10,191¥408¥(3,202)¥19,843

Total sales
Operating expenses
Operating income (loss)

We conducted our audits in accordance with auditing standards generally accepted and applied in

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures
Total assets¥49,324¥40,637¥22,926¥23,956¥7,843¥222,476¥52,029¥21,581¥39,080¥479,852

Depreciation and amortization¥1,242¥2,486¥1,047¥1,149¥719¥4,050¥1,852¥122¥491¥13,158

Impairment of long-lived assets

¥954

¥—

¥—

¥—

¥—

¥61

¥—

¥—

¥—

¥1,015¥1,837¥2,625¥1,457¥1,114¥111¥4,043

¥814

¥82

¥717

¥12,800

Capital expenditures(millions of yen)

2010
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate

Consolidated

I. Sales and Operating Income (loss)

Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

Sales to customers¥53,222¥41,046¥31,536¥24,908¥6,309¥51,699¥6,298¥27,391¥—¥242,409

Intersegment sales

45

305

134

790

582

10

4,099

879

(6,844)—

Total sales

statements based on our audits.

53,26741,351

31,67025,698

6,891

51,70910,39728,270(6,844)242,409

Operating expenses

55,48737,471

29,964

26,224

7,404

54,363

4,413

27,588(4,075)

238,839

Operating income (loss)¥(2,220)¥3,880¥1,706¥(526)¥(513)¥(2,654)¥5,984¥682¥(2,769)¥3,570In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Nisshinbo Holdings Inc. and consolidated subsidiaries as of March 31,
2011 and 2010, and the results of their operations and their cash flows for the year then ended, inconformity with accounting principles and practices generally accepted in Japan.

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures

Total assets¥47,605¥49,088¥22,522¥21,788¥7,323¥56,368¥52,905¥23,856¥76,655¥358,110

Depreciation and amortization¥1,933¥2,344¥952¥1,127¥599¥3,724¥1,806¥124¥353¥12,960

Impairment of long-lived assets¥1,756

¥—

¥—

¥56

¥—

¥—

¥—

¥—

¥542

¥2,354

Capital expenditures¥1,957¥2,589¥1,263¥1,844¥906¥842¥4,154¥123¥ (650)¥13,028(thousands of US dollars)

The United States dollar amounts shown in the consolidated financial statements have been translated
solely for convenience. We have reviewed this translation and, in our opinion, the consolidated financial
statements expressed in Japanese yen have been translated into US dollars on the basis described in
Note 1.

2011
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate$85,694 $1,327,294

Consolidated

I. Sales and Operating Income (loss)
Sales to customers$675,294$542,577$366,141$376,706$146,318$310,035

Intersegment sales

271

4,070

2,071

8,247

6,270

1,753

40,906

12,765(76,353)—

675,565546,647

368,212384,953

91,964

1,329,047

187,224

322,800(76,353)

3,830,059

Operating expenses

673,400

486,765

369,753368,318

95,435

1,256,294

67,329318,000(38,682)

3,596,612

Operating income (loss)$2,165$59,882$(1,541)$16,635$(3,471)$72,753$119,895$4,800$(37,671)$233,447

Total sales$— $3,830,059

June 29, 2011
Tokyo, Japan

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures

56

VERITAS & Co.

Total assets$580,282$478,082$269,718$281,835$92,271 $2,617,365$612,106$253,894

Depreciation and amortization$14,612$29,247$12,318$13,518$8,459$47,647$21,788$1,435$459,765 $5,645,318$5,776

Impairment of long-lived assets$11,223

$—

$—

$—

$—

$718

$—

$—

$—

$11,941

Capital expenditures$21,612$30,882$17,141$13,106$1,306$47,565$9,576$965$8,435$150,588$154,800

57

HISTORYCORPORATE DATA
(As of March 31, 2011)1907

Established Nisshin Cotton Spinning Co., Ltd.

1937

Acquired Kawagoe Cotton Spinning Co., Ltd.

1938

Merged with Nisshin Rayon Co., Ltd. (now the Miai Plant)

1940

Established Toa Jitsugyo Co., Ltd. (name changed to Nisshin Toa Inc. in 1990)

1945

Acquired Meiji Plant, Nanshin Seiki Co., Ltd. (now the Fuji Plant)

1949

Established Nihon Postal Franker Co., Ltd. (name changed to Nisshinbo Postal Chemical Co., Ltd. in 2006)

1958

Established Nippon Kohbunshikan Co., Ltd. (name changed to Nippon Kohbunshi Co., Ltd. in 1986)(acquired by Nisshinbo Mechatronics Inc. in 2010)

1962

English name of company changed to Nisshin Spinning Co., Ltd.

1972

Established Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)

1978

Acquired Tokai Seishi Kougyou Co., Ltd.

1985

Acquired Nisshin Denim Inc.

1989

Established Kohbunshi (Thailand) Ltd. (Thailand)

1993

Established Pudong Kohbunshi (Shanghai) Co., Ltd. (China)(name changed to Nisshinbo Mechatronics (Shanghai) Co., Ltd. in 2010)

1995

Established Nisshinbo Automotive Corporation (U.S.A.)
Established Nisshinbo Urban Development Co., Ltd.

1996

Established Nisshinbo Somboon Automotive Co., Ltd. (Thailand)

1997

Established Nisshinbo Automotive Manufacturing Inc. (U.S.A.)

1998

Established PT. Gistex Nisshinbo Indonesia (Indonesia)

1999

Established Saeron Automotive Corporation (South Korea)

2000

Purchased additional shares of PT. Nikawa Textile Industry (Indonesia)

FoundedFebruary 5, 1907

Common Stock
Authorized 371,755,000 shares
Issued178,798,939 shares		
¥27,588 million—US$325 million

Head Office
2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku,
Tokyo 103-8650, Japan
Tel: +81-3-5695-8833
Fax: +81-3-5695-8970

Shareholders
13,837
Composition of Shareholders

Osaka Branch
2-4-2, Kitakyuhouji-machi, Chuo-ku,
Osaka 541-0057, Japan
Tel: +81-6-6267-5501
Fax: +81-6-6267-5529

Securities
firms

Nagoya Branch
5-2-38, Sakae, Naka-ku,
Nagoya 460-0008, Japan
Tel: +81-52-261-6151
Fax: +81-52-263-9480

2004

Established Continental Teves Corporation (Lian Yun Gang) (China)

2005

Acquired additional shares of ALOKA Co., Ltd.
Made tender offer for additional shares of New Japan Radio Co., Ltd.

2006

Acquired additional shares of Japan Radio Co., Ltd. and Nagano Japan Radio Co., Ltd.

2007

Acquired all shares of Daiwa Shiko Co., Ltd.

2008

Acquired all shares of CHOYA CORP.
Acquired all shares of Nisshinbo Brake Sales Co., Ltd. (acquired by Nisshinbo Brake Inc. in 2010)2009

Spun off five businesses — Textiles, Automobile Brakes, Papers, Mechatronics, and Chemicals — andconverted to holding company; corporate name changed to Nisshinbo Holdings Inc.

2010

Established Nisshinbo-Yawei Precision Instruments & Machinery (Jiangsu) Co., Ltd. (China)(formerly Jiangsu Yawei Nisshinbo Precision Instruments & Machinery Co., Ltd.)
Acquired additional shares in Japan Radio Co., Ltd., making it a consolidated subsidiary
Nagano Japan Radio Co., Ltd. also becomes a consolidated subsidiary as a result

36.3%

15.7%

Employees
Parent Company
228
Subsidiaries
18,064
Total
18,292Other Japaneseinstitutions

Foreigninstitutions

19.6%

23.6%

Listings
Tokyo, Osaka, Nagoya, Fukuoka, and Sapporo
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Established Nisshinbo (Shanghai) Co., Ltd. (China)
Established Saeron Automotive Beijing Corporation (China)

Japanese financial
institutions

Japanese
individuals andothersAcquired all shares of Iwao & Co., Ltd.

2003

0.4%

4.4%

Established Continental Teves Co., Ltd. through merger with Continental Teves AG & Co. oHG(name changed to Continental Automotive Co., Ltd. in 2007)
2002

Treasury stock

Stock Price and Trading Volume(Yen)(Million shares)

1,600

80

Stock price (left)

1,200

60

40

800

Trading volume (right)
400

20

Sold all shares in ALOKA Co., Ltd.
2011

Established Nisshinbo Saeron (Changshu) Automotive Co., Ltd. (China)
0

0
9/08

58

12/08

3/09

6/09

9/09

12/09

3/10

6/10

9/10

12/10

3/11

6/11

59